How Elrond Solves Blockchain’s Classic Trilemma
One of the most pervasive issues with decentralized networks is what is today known as the scalability trilemma. The modern version of this trilemma evolved from the 1980s CAP Theorem, which stated that decentralized data stores (which blockchains are an iteration of) must sacrifice one of the following: consistency, availability, or partition tolerance. The modern take on this for the modern decentralized network says that only two out of three can be solved: decentralization, scalability, and security.
With the breakthrough design of the Secure Proof of Stake (sPoS) consensus algorithm, however, all three benefits of distributed networks can be met. Elrond combines a special type of sharding with a randomized, meritocratic approach to node selection that accounts for validator ratings. Elrond is a carbon-negative blockchain that offers up to 15,000 transactions per second.
Helios Staking has been a part of the Elrond ecosystem serving as a validator since the very beginning. To find out how you can stake $EGLD with us, visit the Helios Staking website today.
This article discusses the following:
- What is the blockchain trilemma?
- How Elrond solves the blockchain trilemma
What is the Blockchain Trilemma?
Design flaws in the architecture of new blockchains seem to fall into a pattern. The conundrum goes like this: blockchains can only meet two out of three of the following benefits — scalability, decentralization, and security. While a blockchain can successfully meet two out of three of these elements, all three elements have been difficult (if not impossible) to fulfill.
As stated in the introduction, the modern day blockchain trilemma has its roots in the early days of decentralized systems ranging back to the 1980s.
Despite the term “blockchain” not being mentioned in the Bitcoin whitepaper, Satoshi addressed the age-old paradigm with a more modern trilemma:
- Decentralization: P2P networks, consensus in globally distributed systems
- Security: Public-key cryptography
- Scalability: P2P networks
Over the next decade, tens of thousands of different cryptocurrencies were released with thousands of different blockchain models vying to improve upon Bitcoin’s Proof of Work design. Although many have tried, very few blockchains have come close to solving this modern trilemma. This is the case with some of the world’s largest blockchains like Ethereum and Ripple.
For example, as is the case with Ripple (Figure A), transactions are fast and inexpensive, but the platform is highly centralized and doesn’t allow for the creation of customizable tokens.
The above figure further illustrates how Bitcoin has the benefit of scarcity, but how it comes at the cost of slow and expensive transactions (as well as high pollution).
That graphic further demonstrates that while Ethereum is highly programmable (think of all the ERC-20 tokens and NFTs), the transactions, similar to Bitcoin, are slow and expensive. Furthermore, there is still an unlimited amount of Ethereum since the rate of new tokens being produced exceeds the total being burned.
These are just a few examples of how one of the trilemma’s principles is typically compromised. Elrond has addressed each pain point of the trilemma by developing a fast, secure and highly scalable blockchain that meets industry demands.
How Elrond Solves Blockchain’s Trilemma
The Elrond blockchain is inherently built to scale through a meritocratic network of nodes that is secure and decentralized. Elrond’s Secure Proof of Stake eliminates computational waste and uses a hybrid combination of node rating and staking to make the ideal validator selection process. Security is maintained through randomized node reshuffling and randomized consensus group sampling.
Scalability
One of the ways that the trilemma can be solved is through what is known as sharding. Sharding partitions data and breaks it down over different servers (nodes) in order to limit any individual server’s computational workload or influence. Sharding distributes data to make it less centralized in one location.
Elrond employs a certain type of sharding known as “Adaptive State Sharding.” This type of sharding combines three types of sharding into one. Adaptive State Sharding is able to achieve parallel processing which increases performance and improves the communication inside of shards. That translates to faster transaction times, increased decentralization, and lighter loads that don’t overwhelm the servers. On each shard, there is only a fractional portion of transactions and just a small component of the entire state of the blockchain.
In total, Elrond is capable of 15,000 transactions per second but scalable up to 100,000 tx/s. The required energy for transaction processing is also 6 million times lower.
Even more impressive, Elrond has accomplished this feat while being recently crowned the “First Carbon Negative Blockchain in Europe.”
“By offsetting more CO2 that our blockchain is responsible for, we can stay ahead of ecosystem growth and make Elrond into a fertile ground for this generation of innovators to seed the foundations of a digital network of trust for the generations to come,” (Beniamin Mincu AP News)
All of this translates to more transactions being verified, validated, and processed at the same time. More information about sharding can be found on this thread in the r/Elrondnetwork subreddit.
Decentralization
Elrond’s built-in randomness ensures decentralization because nodes are redistributed across shards in a way that is uniformed and non-deterministic. Also, the rating of nodes in addition to other factors ensures randomness in the validator selection process. Democratic governance is further introduced in the validator groups through the block’s signature requirement of ⅔ +1 signature.
Additionally, Elrond is enhancing its DeFi capabilities with the launch of the Maiar App. The Chrome and Brave Browser web extension will help usher in a more decentralized way of accessing dApps built on the Elrond network. Soon after the Maiar App is launched, the Maiar Exchange will follow. Read more about Elrond’s latest announcements on Investing.com.
Security
Elrond’s focus on security is implied throughout the project from the technical design of Elrond’s blockchain all the way through to the name of the consensus algorithm, Secured Proof of Stake. Building upon the foundation of Proof of Stake, sPoS offers further assurance of randomization for node selection compared to any blockchain that precedes it.
More specifically, Elrond’s sPoS reduces node latency which is made possible through the design of the block signature. Elrond’s block signature is used as a randomization factor. This reduces the time that Elrond would have to spend on selecting a block committee, which takes other blockchains (e.g., Algorand) up to 12 seconds to complete.
Elrond introduces a concept known as rating, which turns block selection into a meritocracy that has to be earned by prior performance. These added design elements promote fairness, good behavior, and efficiency compared to Elrond’s counterparts.
To enhance the custodial security services for $EGLD, Elrond recently partnered with Copper. The company’s multi-award winning custody solution uses multi-party computation security. Copper’s technology is used by 300 institutional asset managers, 250 assets, and 40 exchanges.
In Conclusion
The scalability trilemma faced by many of the ecosystems in the industry today is nothing new. It is a concept that was derived from decentralized systems of the 1980s. However, the decentralized networks of today just modernized the problem. Bitcoin’s white paper reintroduced a modern spin on each element of the classic CPA theorem, replacing consistency, partition tolerance, and availability with security, decentralized, and scalability.
Elrond touches upon the design elements of the modern decentralized network without sacrificing one component in lieu of the other two. The community and developers have made Elrond into a meritocratic system where validation is a process based on past performance as well as staking.
As Elrond reaches new highs on the heels of announcing US-token availability through Moonpay, a KuCoin listing, and new partnerships, the decentralized blockchain is positioned to grow sustainably and securely.
To read more about how Elrond solves the blockchain scalability trilemma, visit the Elrond website today for more information.
About Helios Staking
Helios Staking is a Staking-as-a-Service company that is focused on the expansion of Proof of Stake (PoS) networks. Helios is one of the Elrond Network’s chosen and trusted Genesis Launch partners, and also works closely with Injective Protocol with whom they’ve won several awards for community, content, and validation.
