This next crypto super match is presenting us a very interesting play-off between two teams of tremendous potential.
On one side is our beloved mighty Elrond with an already established community and infrastructure, and on the other side, one that is promising to be better than its predecessor, the better version of Ethereum, soon to join the big league, Ethereum 2.0
Ethereum developer teams have been hard at work preparing for Ethereum 2.0, the proof-of-stake platform designed to make the blockchain's transactions faster, cheaper, and less energy-intensive. While ETH2 isn't quite baked yet, its first major testnet is live, giving an idea to the people about how the network may soon work.
So, stay close for this match because Ethereum 2.0 was recently released on testnet, promising to go to mainnet in less than 3 months. And who knows what’s next?
Let’s take a look: The long-awaited Ethereum 2.0 upgrade is approaching fast. Ethereum 2.0, also known as Eth2 or “Serenity,” is an upgrade to the Ethereum blockchain. The upgrade is designed to enhance the speed, efficiency, and scalability of the Ethereum network so that it can process more transactions, be way less power-hungry and of course, lower gas fees. But Eth2 also doesn't really exist: in January 2022, the Ethereum Foundation said it would stop referring to the upgrade as Ethereum 2.0. The rebrand is intended to reflect the fact that what's been previously referred to as Ethereum 2.0 is a network upgrade rather than a new network.
Anyway, Eth1 is now known as the "execution layer," where smart contracts and network rules reside, while Eth2 is referred to as the "consensus layer," which ensures that devices contributing to the network are acting in accordance with its rules.
However, despite anything, the project stuck with the name Ethereum 2.0.
But why is there a need for Ethereum 2.0?
Ethereum has several major problems. The first is that gas fees have become very expensive in the last years because the network grew in popularity and therefore became very congested. Validators prioritize users who are willing to pay the highest fees for their transactions. These days, the average transaction on crypto exchange Uniswap costs around $42 in gas fees. The second problem for ethereum is that, as it has become more popular, the amount of computational power used by validators has reached the skyes. It’s the same problem that has brought a lot of negative publicity to bitcoin, because it uses a lot of electric power! And here is where Ethereum 2.0 will solve these problems by moving the platform’s system of validation from “proof of work” to “proof of stake”.
With proof of stake, there’s no need for all validators to do this intense electric power consumption work, because the system chooses one at random to confirm each transaction. There are some in the crypto community against proof of stake because it gives the most power to the biggest validators, potentially allowing them to corrupt the system of validation if they can get control of more than half of the network. Ethereum supporters counter that proof of stake has checks and balances built in that would not allow this from happening.
Either way, ethereum 2.0 promises to reduce the platform’s power consumption by 99.9%, making it far more sustainable. It should also solve the problem with gas fees by raising the platform’s processing ability from 30 transactions a second to a minimum of 1000, as well as making possible more complex smart contracts.
So, when is Ethereum 2.0 happening?
According to their website: Ethereum 2.0 is launching in several phases, with the first upgrade, called the Beacon Chain, having gone live on December 1, 2020. The Beacon Chain introduces native staking to the Ethereum blockchain, a key feature of the network’s shift to a PoS consensus mechanism. As the name suggests, it is a separate blockchain from the Ethereum mainnet.
The second phase, called "the Merge," is expected in the first or second quarter of 2022 and will merge the Beacon Chain with the Ethereum mainnet.
The final phase is shard chains, which will play a key role in scaling the Ethereum network. Instead of settling all operations on one single blockchain, shard chains spread these operations across 64 new chains.
So the full upgrade to Ethereum 2.0 is expected to take place by 2023.
Now, what’s new in the Realm of Elrond?
Technological advancements are shaping our world into something that was a Sci-Fi scenario only a few years ago. We are now instantly sending and receiving emails, calls, videos, anytime, anywhere, shipping anything across the globe, to a point where we have the technology to solve complex problems in milliseconds.
The next big thing is to bring the financial system to the future too. As they say: This is the era of Autonomous Banking, aiming to build a basic financial infrastructure for everyone, helping humanity to rise above the daily struggle for food and minimal subsistence necessities. In their presentation is written:
“By adopting blockchain technology as a financial settlement layer, states, banks, businesses, startups, and individual users around the world, will be able to benefit from faster and significantly cheaper financial services, gaining orders of magnitude in efficiency while exploring new tools for value creation. Connecting the rest of the unbanked world to this new economic efficiency via the internet will be the most effective step to offering them and their families the chance to a better life, and the means to forge a better future.”
Now back to the Elrond technological skills: Elrond’s speed, scalability and security are beyond impressive. It is a wizard ready for any mission and loves to compete at the highest level. In short, Elrond fixed the blockchain trilemma by combining decentralization, scalability, and security.
These are simple enough on a case-by-case basis but your blockchains have been able to meet the demands of each without somehow sacrificing the other.
One feature worth mentioning is that when it comes to its native token EGLD. Elrond will never upscale beyond its maximum total supply of around 31 million.
With the first 20 million already minted the remainder will be distributed as rewards to the validators across the network. This gives it a scarcity akin to Bitcoin, which has obvious upside for its strong and committed community.
As for scalability on the network, it’s another story. This in part is thanks to its foundational Innovation that is adaptive state sharding. Elrond’s team of developers took some of the lessons from other blockchains sharding like Ethereum 2.0 and Zilliqa (ZIL) combining them into a blockchain that can meet the demands of DeFi, NFTs, and of course regular peer-to-peer transactions. And briefly, sharding means splitting the blockchain into smaller pieces known as shards. Increasing speed by dividing the transaction between different clusters of validator nodes. And while this concept isn’t unique to Elrond, they’ve raised the bar by implementing three different types of sharding.
Three parallel processes are making Elrond to handle such a huge number of transactions that scale:
State, Transactions and Network. Reaching 15,000 transactions per second, but according to runs on the testnet, it’s said to move up to the hundreds of thousands. The secret skill to this adaptive state sharding is unsecured proof of stake consensus method, which uses random sampling of consensus groups to ensure optimal network security while guaranteeing the validity of each transaction. Elrond might not have infinite resources back to them, but they have an incredible team behind them. Some of the best tech and are combining it to create a super functional platform and intuitive user experience.
Another great skill of Elrond is in the Maiar Exchange. A mainnet interface where it has hundreds of thousands of users are enjoying some serious powerful features. There are a lot of tokens users can trade now in the Exchange and the community is developing more and more tools to ease everything, even the locked tokens generated into the farms.
So, Elrond is a serious project that has managed to combine the best features of many leading cryptocurrencies in the space, and even improve them, like:
Elrond’s adaptive stake sharding is better than the sharding we will see in Ethereum 2.0; Elrond’s secured Proof of Stake is better than Harmonies' effective Proof of Stake; Elrond’s Arwen Virtual Machine is better than Cosmos Cos WASM Virtual Machine; When you combine these three features you get a blockchain that is theoretically capable of handling more transactions per second than every other smart contract blockchain combined. Elrond’s growth has been exponential since its main net launched last summer.
From where I’m standing this growth has been well deserved and there is much more on the horizon. Besides the expansion of staking participation and rewards with phases three and four, the Elrond DeFi ecosystem will likely drive some serious demand for EGLD.
Elrond’s openly staked mission is to become the bedrock for the next generation of global finance. The EGLD token has been considered as being the most optimal cryptocurrency on the market due to its economic attributes. And more and more companies are choosing Elrond. As a new example, ZoidPay, recently adopted Elrond as their main network, opening the worldwide crypto shopping! Now crypto holders can avail of instant liquidity to complete digital payments at over 100 million merchants globally - wherever VISA, MasterCard, JCB, UnionPay are accepted.
As a conclusion, I am very curious about the release of Ethereum 2.0 and what impact will have in the crypto world!. Given the potential of Ethereum 2.0 and Elrond, perhaps both will take an important part in our future. There really is only one way to find out and as you know it, that’s to stick around for the long term.
Please remember we all are very early in this game and who knows what the future holds. Do your own research and investigate the information in multiple sources before you decide on what project you wanna invest your money. Until next time, be nice, have fun, and take care of your money!