Elrond Compared to Ethereum 2.0


Cryptocurrencies were created to decentralise transactions and give users full control of and unlimited access to their money. Although they have been a major improvement over fiat currencies, blockchain networks have had challenges like high transaction fees. In addition, earlier networks failed in their attempts to merge scalability with decentralisation. This is why developers kept trying to develop new or improved earlier versions of existing blockchain networks. Elrond and Ethereum 2.0 were created as solutions to these problems. Elrond is a relatively new blockchain while Ethereum 2.0 is an upgrade of the Ethereum network. In this article, you will learn more about Elrond and Ethereum 2.0. You’ll learn about their features and appreciate their differences. Read on to see Elrond compared to Ethereum 2.0.

What is Ethereum 2.0?

Ethereum 2.0 is an upgrade to the Ethereum blockchain. This started on December 1, 2020, and revolutionized blockchain technology. Ethereum 2.0 made the existing Ethereum public mainnet more powerful, more scalable, more sustainable, and more secure.

That’s quite a mouthful, isn’t it?

From a user's perspective, the most important thing to know is that there are now tons of opportunities to earn a great passive income on your Ethereum investment through staking. However, you should keep in mind that this upgrade was not automatic. It’s been a gradual shift and so, has required a lot of development and patience. Changing the Proof of Work mechanism was one of the most incredible things the developers did. At first, Ethereum operated on the Proof of Work consensus mechanism just like Bitcoin. Our last article hinted at why this system is far from perfect as there are three major flaws associated with it. These are the problems the Proof of Work consensus mechanism comes with:

  • It consumes 14,400kWh to validate transactions and keep the network secure. That energy can give Lagos and Ibadan an uninterrupted power supply for at least a day.
  • It's way too slow. That version of Ethereum could process around 15 transactions per second. With the coin gaining popularity, that needed to be changed.
  • It's a bit centralised. Large crypto miners build their facilities in places where electricity is cheap. The majority of the miners were in China because of cheap electricity but because of government regulations have been forced to close down.

The improved scalability, security, and sustainability as seen with the new and improved Ethereum 2.0 are a result of the swap to the Proof of Stake mechanism. However, this isn’t the only thing that makes this upgrade special. The developers also incorporated what is called “Sharding” in the Ethereum blockchain.

So, what is Sharding and how does it solve the problem?

Well, think of a glass jar, if it is accidentally dropped on the floor, it breaks into hundreds and thousands of shards. Similarly, the Ethereum blockchain can be split into several shards. Shard chains split the Ethereum blockchain and divide the data processing responsibility among multiple Nodes instead of a single Node. As a result, shard makes it possible for transactions to be processed in parallel rather than consecutively. This makes Ethereum capable of executing thousands of transactions per second.

This amazing duo of PoS and Shard Chains are the two most important things about Ethereum 2.0. Is Ethereum 2.0 fully launched yet? The answer is both yes and no. Ethereum 2.0 is a multi-phase rollout starting with phase 0 and ending at Phase 3. Phase 0 already kickstarted on December 1, 2020, but the full upgrade rollout might be 2022.

One important thing to keep in mind is that Ethereum 2.0 will launch as a separate network. What this means is that Ethereum 1.0 will not be destroyed. Rather, it will coexist in parallel with the Ethereum 2.0 development phase.

Ethereum 2.0 Development Phase

  • The first upgrade, called the Beacon Chain, went 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 (Proof of Stake) 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 and 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.

This also means that it is much easier from a hardware perspective to run an Ethereum node because there is far less data that needs to be stored on a machine.

Shard Chains aren’t expected until 2022, but it is unclear exactly when.

What is Elrond?

Elrond creates innovative features to develop current technologies to make them powerful enough to operate at the Internet scale. Developers, validators and businesses use Elrond to build a new Internet economy. Elrond is powered by its native cryptocurrency electronic gold, EGLD coin. It powers the Elrond network by serving as a medium of exchange between users and developers. It's also used to interact with applications, send transactions and incentivize actors supporting the network. The network structure comprises of 3 Shards and a Metachain.

How does Elrond work?

Have you heard of the adaptive state sharding scaling techniques? Each shard processes only a fraction of transactions simultaneously with other shards. The shards are responsible for executing accounts, smart contracts, blockchains, e.t.c. which plays a crucial role in scaling. Sharding is a technique that breaks data down into smaller pieces and distributes them across multiple pieces of the network or shards, each comprising several Nodes that process transactions by this way whatever the fluctuations in the numbers of shards are, they should have little or no effect on downtime or state updates. Elrond state sharding can adapt to population and demand changes with no impact on security or availability. Proof of stake consensus mechanism keeps the distributed network of computers running its blockchain in sync; this system is called secure proof of stake. Similar to the traditional pose-spose is used by computers running Elrond software to secure the network, validate transactions and distribute newly minted EGLD coins. However, Elrond ecosystem uses Shards rather than a single chain exposed consensus mechanism used to select validating Nodes to produce blocks within a Shard rather than the entire network. They are responsible for completing the overall consensus process which takes place in some particular Shards metachain. The meta chain runs in a dedicated shard and performs tasks such as authenticating and finalising Shard block headers or facilitating communication between Shards.

The last is the Nodes which are an important element of the network. Nodes can be a smartphone, a computer or a server come together to form a network. Elrond Nodes form a consensus group rating based on which the chances of becoming a validator for the next block are determined.

Validators are shuffled randomly and can be redefined to another segment; this maintains a high level of network security among these Nodes, some acting as validators while some as observers. Hence, providing different levels of support to the network and earning rewards for their work. Elrond handles higher volumes of transactions and is also considered one of the most consumer-friendly blockchain platforms. Elrond is as valuable as its level of usage. The number of active users can also indicate how valuable Elrond is as a blockchain project with a special utility. To increase adoption the project also supports developers building on the platform, allowing them to earn 30% of the smart contract fees as royalties.

Differences Between Ethereum 2.0 and Elrond

The major concern facing some of the largest blockchain networks today is scaling and throughput. Over the years we have heard and seen some Blockchain Networks bloat, leading to frustrations that come with low throughput and slow transactions. The Ethereum network is set to be designed based on PoS and sharding mechanism, just like Elrond, but there are some remarkable differences between the current Ethereum and Elrond networks. Below are some of them:

1. Speed & costs of transactions

Recent reports indicate that the Ethereum network has been breaking all transaction fee records with some historical highs experienced over the blockchain network. Under such conditions, it’s becoming increasingly difficult for smart contract developers to maintain their applications on the Ethereum network. The Elrond network, on the other hand, has been striving to solve the problem of transaction costs, by providing low-cost transactions. The network has shown some record-breaking transaction speeds of 263,000 transactions per second. This speed is more than 10 times Visa’s 25,000 transactions per second. Compared to ETH 2.0’s 100,000 transactions per second, Elrond is still over 2.6 faster than Ethereum. This makes Elrond even cheaper than Ethereum, as transaction processing fees are lowered with faster processing time.

2. Technical complexity

Compared to Ethereum, Elrond has low technical complexity for staking. It is run in such a way that after the end of each epoch, 80 of all validators in each shard are randomly shuffled to a different shard, put on the waiting list. Technically, the process reduces the risks of malicious attacks. It also prevents possible network failures during data synchronisation from another shard.

The two Blockchain networks, however, share some common features. For example, they both use virtual machines for smart contracts. While ETH 2.0 will be using WebAssembly (ewasm), and potentially providing an opportunity for cross-chain interaction between networks at the smart contract level, Elrond executes ewasm via Arwen VM and uses the Rust language and Visual Studio Code extension to write contract code. The latter has also implemented support for async smart contract calls on a sharded architecture. But unlike ETH 2.0, the Elrond network offers royalties worth up to 30% for smart contract authors, which greatly incentivize skilled developers to continue joining and working with the network. The strategy is expected to facilitate the growth of the Elrond network with its smart contract infrastructure.

3. Community

Ethereum is buzzing with a clear advantage when it comes to the community network. Ethereum has been in the game for a longer period and has built a strong team that has earned the trust of a large community. Ethereum’s native cryptocurrency, ETH, is one of the most popular digital assets, only second to Bitcoin in terms of market capitalization.

Ethereum has a large development ecosystem with a trusted team under Ethereum Foundation. The team has extensive experience in developing solutions, ranging from DeFi to NFTs. The major challenge with Ethereum, however, is the technical difficulty when transferring functionality from the old network to the new one. Moreover, ETH 2.0’s multi-client approach is said to slow down development, because of the requirement that compatibility between clients must be insured. This challenge is less pronounced in Elrond. Elrond is currently still smaller in community size, but coming up as one of the most exciting networks for any skilled developer to join. With a high frequency of new developments, you will find a fast-growing community.


Elrond has experienced some remarkable growth in terms of community involvement over the last year. It has grown its social media audience four-fold, mainly on Twitter and Facebook. Their marketing efforts are focused outside of the blockchain world, explaining the sudden influx of new people. Although the blockchain network does not position itself as an Ethereum competitor, it has been built to solve some of the pressing issues affecting internet users on a larger scale. This is why Elrond is definitely the blockchain of the future and recent developments like crypto gaming and non-fungible tokens (NFTs). To learn more about Elrond or stake your EGLD with us, visit our blog.

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