Cryptocurrency and smart contract platforms such as Bitcoin and Ethereum have sparked considerable interest and have become promising solutions for electronic payments, decentralized applications and potential digital stores of value. However, when compared to their centralized counterparts in key metrics, the current state of affairs suggests that present public blockchain iterations exhibit severe limitations, particularly with respect to scalability, hindering their mainstream adoption and delaying public use. In fact, it has proved extremely challenging to deal with the current engineering boundaries imposed by the trade-offs in the blockchain trilemma paradigm. Several solutions have been proposed, but few of them have shown significant and viable results. Thus, in order to solve the scalability problem, a complete rethinking of public blockchain infrastructures was required.
Elrond proposes a dynamically adaptive sharding mechanism that enables shard computation and reorganizing based on necessity and the number of active network nodes. The reassignment of nodes in the shards at the beginning of each epoch is progressive and nondeterministic, inducing no temporary liveness penalties. Adaptive state sharding comes with additional challenges compared to the static model. One of the key-points resides in how shard-splitting and shardmerging is done to prevent overall latency penalties introduced by the synchronization/communication needs when the shard number changes. Latency, in this case, is the communication overhead required by nodes, in order to retrieve the new state, once their shard address space assignment has been modified.
Much of Ethereum’s success can be attributed to the introduction of its decentralized applications layer through EVM, Solidity and Web3j. While Dapps have been one of the core features of ethereum, scalability has proved a pressing limitation. Considerable research has been put into solving this problem, however results have been negligible up to this point. Still, few promising improvements are being proposed: Casper prepares an update that will replace the current Proof of Work (PoW) consensus with a Proof of Stake (PoS), while Plasma based side-chains and sharding are expected to become available in the near future, alleviating Ethereum’s scalability problem at least partially.
Compared to Ethereum, Elrond eliminates both energy and computational waste from PoW algorithms by implementing a SPoS consensus while using transaction processing parallelism through sharding.