Sharding-based Elrond Network to Be Released on Binance Launchpad

Beniamin Mincu, the Founder of Elrond, a high-throughput, public blockchain network focused on enabling fast transaction speed on a low-cost platform, recently shared his views and insights regarding how developers are using various blockchain scalability techniques to improve the performance of cryptocurrency networks.

$1.9 Million Raised to Fund Elrond’s Development

Notably, the developers of the sharding-based Elrond project have managed to raise $1.9 million to help fund the platform’s ongoing development. Elrond is reportedly the next project that is scheduled for release on the Binance Launchpad.

Mincu, who’s also the CEO at Elrond, revealed that the Elrond network aims to provide a high level of security and scalability by using adaptive state sharding and a new type of proof-of-stake (PoS)-based consensus algorithm.

In an exclusive interview with CryptoGlobe, Mincu helped us answer several important questions regarding the benefits of introducing new projects through Binance Launchpad and the potential impact of initial exchange offerings (IEOs) on the digital asset market.

Many developers are using Sharding to scale and improve blockchain architecture. What was your reason for choosing this approach for the Elrond project?

“We’ve come to understand that the performance of a blockchain system can be considerably increased in two fundamental ways: ‘vertically’, by increasing the performance of every node in the network or ‘horizontally’ by splitting the workload among multiple nodes for parallel processing.

Vertical scaling has some limitations, because one can increase the performance of a single machine (node) by adding more CPUs, RAM, GPUs only until a certain point. Given that few nodes in the network will be able to upgrade to keep up, the performance increase on the network will only be marginal; if minimum requirements set for participating in the network become too high on the other hand, centralization risks will arise.

Sharding is a concept that has been first used in databases to improve performance and efficiency. A shard is a horizontal partition of the database, which can be stored on a different server, thus spreading the load on multiple machines.

Sharding in blockchains is relatively new and comes in different flavors:

  • network/communication sharding: improve the communication by propagating messages in smaller partitions;
  • transaction/computation sharding: instead of having every single transaction processed by all machines in the network, split the network into subgroups and have each subgroup process different transactions in parallel;
  • state/storage sharding: decrease the storage needs for every node, by splitting the blockchain and state data across shards.

The optimal approach for blockchain sharding, needs to take into consideration advantages from all three sharding types. Elrond’s approach to scalability and increased throughput, called “Adaptive State Sharding”, combines all three sharding types into a solution that will scale almost linearly with the number of shards, improve communication inside the shards, increase performance through parallel processing and reduce storage. This is what a 1000x improvement solution looks like."

What are the benefits or advantages of using Binance Launchpad, when compared to introducing a project on your own?

“Binance has positioned itself as the most influential exchange in the world with one of the largest audiences in the crypto space. Projects that are on the launchpad attract a lot of attention in a very short period of time. On the other hand, the cost and effort to introduce a project with no such help is extremely high and even when executed formidably the impact is limited compared to what Binance can bring. Thus, we think Binance launchpad is unparalleled in terms of marketing exposure, and distribution channel. This was a great opportunity for Elrond.”

What are the main things you learned from working on the NEM project that you are currently applying or have been influenced by - and has this improved your ability to work on the projects you are presently involved in?

“I joined NEM right at the beginning, so I have learned many useful lessons through trial and error. What was especially important was to see what it takes to bring a project from a mere bitcointalk post forum, to a billion dollar blockchain product.

There were two things that counted: (1) the team and the (2) the distribution or bringing the technology to market. Those lessons have been invaluable for me while building the Elrond team, and preparing the go-to-market strategy."

Do you think initial exchange offerings (IEOs) will effectively replace initial coin offerings (ICOs)?

“I don’t think IEOs will replace all ICOs. By definition exchanges will filter very aggressively for quality of the project they list, and most ICOs will not pass that filter which is a good thing. But I do think that exchanges like Binance have a strong value proposition through the way they perform their rigorous due diligence process, and their launchpad solution offers an unparalleled marketing outreach and distribution channel. So while ICOs will probably exist for a long time, IEOs done on exchanges like Binance will like be the most compelling option for both blockchain startups and investors.”

The Rise of IEOs and Why They Are Here to Stay

Will Heasman

The advent of initial coin offerings or ICOs revolutionized the future of investing -- particularly within the cryptocurrency industry. At the height of its popularity between 2017 and 2018, ICOs had raised over $14 billion. In just two years, the entire market had accrued almost 140x the total amount gathered in the three years prior; the demand was inconceivable, and nothing was going to stop it - until something did.

IEO dataSource: icodata.io

While ICOs were booming in the relatively nascent cryptocurrency market, they were but a dot on the radar of the Securities and Exchange Commission (SEC). But this dot was growing larger and larger. ICO fundraising plateaued by the end of 2017 with $1.6 billion start-ups funded in December alone; precisely a year later, offerings raised a pale $74 million - a massive 95% reduction from the peak of the ICO craze.

For the most part, the SEC's crackdown circa 2018, is regarded as the veritable death knell for ICOs. The liquidity risks; the potential for scams; and the lack of investor protections all more than outweighed the potential innovation in the mind of the SEC. With a clear mandate to protect investor interest, the SEC slapped penalties on tokens they considered "unregistered securities," discouraging further participation, both from projects and investors alike.

Time for the STO

Though it wasn't all for nothing. The monumental rise and brutal fall of this unique investment instrument paved the way for more adaptive derivatives. From the shattered remains of the ICO rose Security Token offerings (STO), a similar fundraising vehicle boasting one thing ICOs lacked - a transparent, and compliant regulatory framework.

The prevalence of STOs has seen an impressive 130% increase in the first quarter of 2019 alone. However, as with anything, they have their drawbacks. Thanks to the innate compliance afforded by STOs - such as the obligation to register as security and the regulatory due diligence that comes with it - STOs favor accredited, rather than retail investors. As a result, there are very few exchanges that are able, or indeed willing, to list these tokens.

In Steps the IEO

Looking to strike a pleasing middle ground, Initial exchange offerings (IEOs) took the mantle in 2019, raising an estimated $1.7 billion so far.

2.pngSource: Coinschedule

IEOs instantly negated the aforementioned listing issue, providing immediate liquidity by offering the token directly from the exchange. Legitimacy concerns were also remedied, with the IEO platform essentially staking its reputation on the token sale. Moreover, security strengthened through hosting via secured platforms - avoiding the need for vulnerable smart contracts.

Much like STOs, KYC compliance is often mandatory; but investor accreditation is not -- at least not to the same degree as traditional securities laws.

IEO Performance

IEOs have allowed popular exchanges such as OKEx, Binance, Huobi, and Bitfinex to capitalize on the mania around digital offerings, giving new life to what was a dying form of funding. IEO Platforms such as OKEx Jumpstart, have already reared some valuable players in the crypto ecosystem.

Among the most notable of these players is BitTorrent (BTT); the first IEO on Binance Launchpad. In January, 59.8 billion BTT went on sale, with a funding goal of $7.2 million. Within minutes the sale was over, and the goal met.

With a starting value of $0.00012 and a current value of $0.00043, BTT cites a sizable return on investment (ROI) of 258%. This is even more remarkable given that its value has retraced from an all-time high (ATH) of $0.0018 in May - at which time BTT reported an incredible 1400% ROI.

BTT/USDT over the last 90 daysBTT/USDT over the last 90 days | Source: CryptoCompare

Another popular offering arrived in July - this time on OKEx Jumpstart. OKEx Jumpstart has launched eight projects thus far, each differing in use-case and demonstrating varying levels of potential.

UK-based fintech company, Wirex (EXT), was the fourth token to launch on Jumpstart, and it didn't disappoint. WXT met the fundraising goal of $7 million in just 14 minutes.

Starting at a price of just $0.00500 per token, and citing a current price of $0.0147, WXT's total ROI to date stands at 194%. At its peak, WXT fetched a tidy $0.0340, providing an ATH ROI of 580%.

WXT/USDT over the last 90 daysWXT/USDT over the last 90 days | Source: CryptoCompare

Following the success of WTX was Jumpstart’s fifth IEO, Eminer (EM). With a starting price of $0.015 and a funding goal set at $11.6 million, EM stepped up the stakes a little. Nevertheless, the goal was met and the token opened at nearly 3x the sale price, trading instantly at $0.042. This marked an extraordinary ATH straight off the bat, with an immediate ROI of 180%. EM fetches a current price of $0.030, up 100% in all-time ROI.

Eminer price performanceEminer price performance | Source: CryptoCompare

IEO Platform Performance

In terms of IEO platform performance, there are three which stand out from the crowd. Binance, OKEx, and Huobi. According to CryptoCompare data, all three exchanges are ranked in high esteem, with Binance and OKEx both achieving an 'A' rating, and Huobi, a 'B.'

The real test, though, is drawn through the percentage gains of their IEO tokens. Using data gathered from Cryptorank, we can see this performance in action. Based on the mean USD return of all launched tokens, Gatehub is in first place with 11 IEOs and a 97% average ROI. The exchange isn’t, however, ranked as a top tier exchange according to CryptoCompare’s Exchange Benchmark ratings.

OKEx steals first place if we only consider highly-rated exchanges, with an average 73.28% ROI from a total of 8 IEOs. Binance comes in second, citing a 71.9% average ROI from a total of 8 IEOs. And last but not least, Huobi with a 47.30% average ROI from a total of 8 IEOs.

IEO performances by platformSource: Cryptorank

Interestingly, if we look at ATH ROI, the positions change a little. Using this method, Binance places first with a 690% ATH ROI. However, Houbi steps up a rank with an impressive 632% average ATH ROI. This leaves OKEx in third, citing a decent 518% average ATH ROI.

Looking into ATH ROI data can be tricky, however, as it only means their tokens were at one point extremely valuable, but ended up dropping over a longer period of time.

Given this colossal scope for potential IEOs continue to proliferate along with the platforms they’re offered on. Together with this growing popularity and with their ICO predecessors already surmounting major hurdles to adoption, IEOs look like a trend set to continue.