What is Elrond? (EGLD)

The Beginner’s Guide

Elrond is a software that seeks to incentivize a distributed network of computers to run a smart contract platform that aims to prioritize scalability and low transaction fees.

In this way, Elrond is designed to compete against major blockchains, such as Ethereum and Zilliqa, aiming to grow an ecosystem of decentralized applications and cryptocurrencies

To do so, Elrond employs two unique features:

  • Adaptive State Sharding – The process of splitting the Elrond infrastructure to support more transactions and programs
  • Secure Proof-of-Stake (SPoS) – The consensus mechanism devised to sync separate network components to a common ledger

Further, developers will use the Elrond Integrated Development Environment to write and launch customizable programs that replicate goods and services on its platform. 

Elrond is powered by its native cryptocurrency, EGLD coin, which is used to interact with applications, send transactions, and incentivize actors supporting the network.

For more regular updates from their team, you can check out Elrond's Blog, which releases categorized updates for technologically or economically curious users. 

what is elrond egld

Who Created Elrond EGLD Coin?

Elrond was founded by Lucian Todea, Beniamin and Lucian Mincu in 2017 and is supported by Elrond Network, a company based in Malta dedicated to expanding the project.

In June 2019, the project conducted a private investment round raising $1.9 million from several angel investors. That same month, Elrond held an Initial Exchange Offering (IEO) that raised $3.25 million in exchange for 25% of its total token supply.

At the time, Elrond distributed its cryptocurrency as ERD coin, but, after the project launched its mainnet in July 2020, Elond changed its cryptocurrency to EGLD coin. The project then held a transitory event that enabled its investors to swap ERD for Elrond’s new EGLD cryptocurrency.

How Does Elrond Work?

The Elrond network offers many features common to other cryptocurrency networks, like smart contracts, transaction settlement, and token issuance.

Developers can use programming languages (such as Rust, C and C++) to run custom programming logic (smart contracts) and design new programs (decentralized applications) to offer a variety of products and services.

Unique to Elrond is its design variations of sharding and proof-of-stake, helping process roughly 12,500 transactions per second.


Sharding works by splitting the network into pieces, or shards, for nodes to only process a fraction of the network’s transactions. This practice is also implemented in competing other blockchains such as Zilliqa and Polkadot.

Elrond’s transaction processing mechanism is called ‘Adaptive State Sharding,’ where nodes are split into subsets to verify transactions. Once the transactions are processed, the shards broadcast them to the metachain (Elrond’s central blockchain) where they will be settled.

Of note, every 24 hours, one-third of the nodes validating transactions in each shard are reshuffled to a new shard, with the intent of preventing collusion among validators in each shard.

Secure Proof of Stake (SPoS)

Central to Elrond is the Secure Proof of Stake (SPoS), a Proof of Stake governance mechanism that keeps the distributed network of computers running its blockchain in sync.

Similar to traditional PoS, SPoS is used by computers running the Elrond software to secure the network, validate transactions, and distribute newly minted EGLD coins.

However, since Elrond’s network consists of shards rather than a single chain, its SPoS consensus mechanism is used to select validating nodes to produce blocks within a shard rather than the entire network. 

To achieve final settlement, validators must check the work of block producers and sync with other shards within the network. Once a batch of transactions is successfully appended to the Elrond blockchain, these contributors are rewarded with EGLD tokens.

Why does EGLD have value?

Elrond’s cryptocurrency, EGLD, plays a key role in maintaining its network and can be used for sending, rewarding network contributors, and running smart contracts.

By owning and staking EGLD, users gain the ability to vote on network upgrades and are rewarded with newly minted EGL, proportional to the amount staked.

Elrond gives out 30% of the transaction fees to the authors of smart contracts in what they call “smart contract royalties.” Elrond also extracts 10% of all transaction fees to reward community participants in special events, bounty projects, and  network development.

Like many cryptocurrencies, the supply of EGLD is limited, meaning that according to the software’s rules there will only ever be 20 million EGLD.

Why use EGLD?

Users may find Elrond appealing based on its attempt to create a scalable platform for decentralized applications 

Further, developers may find the platform attractive for the ability to capture a higher share of transaction fees within their deployed applications.

Investors may seek to buy EGLD and add it to their portfolio should they believe the market will favor scalable application platforms. 

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