What Is MultiversX (EGLD)?
| — Blockchains are great at transferring value, but not all of them can process transactions quickly enough to support complex apps.|
— MultiversX (formerly Elrond) is a blockchain platform that focuses on processing transactions extremely quickly using a Secure Proof of Stake consensus and Adaptive State Sharding.
— EGLD (Electronic Gold) is the native token of the MultiversX network and it serves multiple purposes including running smart contracts, platform governance and facilitating value exchange.
— MultiversX can process transactions very quickly, making it an obvious choice for decentralized apps.
You might already know that blockchains are great for processing secure transactions. Since they are secure, transparent and often decentralized in a way the current internet is not. These core features lend their hand to use-cases like peer to peer transfer of valuable assets and as a digital store of value. But did you know they can handle decentralized applications too?
Essentially, smart contracts allowed these decentralized networks to support apps. Instead of operating under the control of a single person or entity, these apps run using computer code. And of course like with traditional apps, the use-cases for decentralized apps are limitless. Decentralized apps allow for decentralized trading and lending platforms, and even blockchain games and metaverses solely governed by their players. However, to build an impressive game, you need a scalable network.
And keeping a network as secure and decentralized as possible involves being slow—too slow to support games at a level we’re used to. It’s all due to something called the blockchain trilemma. It means that the security, decentralization and scalability of a network directly impact each other. So there are a few ways blockchain networks can improve their scalability, but each of them will impact the network’s security or decentralization.
A network focusing on this kind of scalability is MultiversX, using techniques such as Secure Proof of Stake and Adaptive Sharding to achieve its goal. But, before you get lost in the technicalities, let’s start with the basics.
You might be thinking “what is MultiversX?” or even “What was Elrond exactly?”
To understand the MultiversX ecosystem in its entirety, let’s first start with its origins.
The History of MultiversX: What was Elrond?
MultiversX was originally launched in 2017 under the name Elrond by Lucian Todea and brothers, Benjamin and Lucian Mincu. If those names sound familiar, there may be a reason why. The Mincu brothers are also the founders of digital asset investment fund MetaChain Capital. Their idea was that Elrond would focus primarily on being both fast and scalable. At this time, its native coin was named ERD and with these core elements, the team managed to raise over $2 million in a private funding round in June 2019.
Since the Mincu brother’s previous project specialized in the aggregation of ICO data, Elrond’s own ICO raised over $3.2 million, selling 25% of ERD’s total supply.
Following that, came the launch of the mainnet in 2020, at which time ERD was renamed “eGold” (EGLD). Since then, the network’s focus on scalable apps made it popular for more complex decentralized projects such as blockchain games and metaverses. And as a result, the team announced its rebrand to MultiversX in November of 2022—the name it still has today.
What Is MultiversX (EGLD)?
MultiversX describes itself as a blockchain platform for the new internet economy; focusing mainly on enterprise solutions and dapps. All of these innovations are due to MultiversX’s main selling point: its scalability.
To explain, scalability refers to a blockchain’s ability to handle a large number of transactions. As transaction volume grows, transaction speeds can slow down. This can lead to more expensive transactions. These specific features make certain networks too slow and expensive to handle complex apps.
To get around these challenges, MultiversX implemented adaptive state sharding. This unique functionality means the network is capable of executing 15,000 transactions per second with a six-second latency—a huge benefit for complex decentralized blockchain games and apps.
Then with its change of name from Elrond to MultiversX, it doubled-down on this capability. This transition also marked the launch of three new metaverse-related products: xFabric, xPortal, and xWorlds.
But before we get there, let’s dive into the MultiversX ecosystem from its native coin to the platforms it supports.
The MultiversX Ecosystem
The MultiversX ecosystem is vast, with the second most validators on a proof-of-stake network after Ethereum. So what’s happening on this network exactly?
What Is EGLD Coin?
At the heart of MultiversX is its native coin, EGLD (Electronic Gold). This is the coin you pay transaction fees with and it also facilitates exchanges between the platform’s users. And today, EGLD has a market cap of $983,233,404 USD.
However EGLD also has another important use: as a governance token. Put simply, it allows holders to participate in network decisions. To understand the governance of this network, let’s next look at its allocation: This determines which group of people have the most control over the network.
For starters, EGLD has a maximum supply of 31,415,926 coins. Out of this total, around 25,803,540 of these are currently circulating, with 25% of EGLD distributed through public sale, and 19% through private sale. Then a further, 8.5% of EGLD coins were set aside for the grants and accelerator pool, 7% was reserved for rewards and incentives and a 2% went to its community fund. To follow, 17% was dedicated for the company reserve for use in future projects or initiatives.
Of course, a portion of the EGLD coins also went to the MultiversX team and their collaborators too. The team themselves received 19% of the total, whereas their advisors received 2.5%. This means that while the network is decentralized, its governance is not completely decentralized, as the original team controls almost as much of the native coin that is in circulation.
Platforms In the MultiversX Ecosystem
So, to understand the ecosystem, let’s take a look at some of its most integral platforms:
xExchange: Once Called the Maiar exchange, xExchange is now a dedicated decentralized exchange (DEX) designed specifically for the MultiversX ecosystem. This platform allows you to swap cryptocurrencies, like you’d expect, but it also offers a way to participate in pooled staking to earn rewards too.
xSpotlight: Formerly known as Inspire Art, xSpotlight is the MultiversX web3 culture hub, allowing users to buy, sell, create and display NFTs.
xExplorer: This tool, previously known as Elrond Explorer, is MultiversX’s own block explorer. Much like Etherscan on the Ethereum network, you can use xExplorer to track transactions in the MultiversX ecosystem.
MultiversX wallet: The original non-custodial wallet of the MultiversX ecosystem was once known as Elrond Wallet. Today, this is the native wallet of the MultiversX network.
MutiversX Bridges: This is the blockchain bridge that allows users to move funds from the Ethereum or Binance Smart Chain networks to the MultiversX network.
xLaunchpad: Formerly known as the Maiar Launchpad, this platform allows developers to create web3 projects in the MultiversX ecosystem.
xPortal xPortal is a superapp, allowing users to manage their crypto and NFTs and digital identities.
xFabric and xWorlds: xFabric and xWorlds are still yet to launch but will open up the playing field for web3 creators and the metaverse. xFabric will allow users to create blockchain apps with no coding skills necessary, whereas xWorlds will support multiple metaverses, becoming the first network of interoperable metaverses on the blockchain.
How Does The MultiversX Blockchain Work?
Well, the inner workings of MuliversX may seem rather complicated, but the core value of the network is down to two key aspects: its consensus mechanism and its unique method of adaptive state sharding. Let’s see how these key pieces work together to allow MultiversX to process transactions at a fraction of the speed of its competitors.
What is MultiversX’s Secure Proof-of-Stake (SPoS)?
MultiversX uses its own type of consensus mechanism to process transactions, called Secure proof-of-stake. You might have already heard about Proof of Stake (PoS) since it is currently the most popular consensus mechanism. But what about secure proof-of-stake?
Well, like traditional PoS, Secure proof of stake requires validators to “stake” cryptocurrency as collateral when validating transactions. In return they receive rewards, which acts as an incentive for validators to behave with the chain’s best interests at heart. This keeps the network secure.
However, secure proof-of-stake networks choose their validators a little differently. With traditional proof-of-stake, the more cryptocurrency validators stake, the better chance they have to create blocks and validate transactions. With Secure proof-of-stake, validators with enough stake take turns in creating blocks instead. This guarantees no single validator has too much power. There is also a validator rating system, which expels validators with too low a rating. This is similar, but not identical to both nominated (NPoS) and delegated proof-of-stake (DPoS), wherein validators are “backed” by other participants.
The other interesting feature of Secure proof-of-stake is how it manages to process a huge amount of transactions at once. This is due to its most unique feature: Adaptive state sharding.
Adaptive State Sharding
Put simply, the MultiversX network uses adaptive state sharding to guarantee ultra fast transaction speeds. But how does that work exactly?
Well, on a basic level, sharding is a scalability solution for blockchains which involves dividing the network into independent subsets called ‘shards’. To explain, each shard acts as a mini-blockchain with its own group of nodes responsible for processing transactions. This allows the network to handle multiple transactions simultaneously, processing them via multiple shards.
MultiversX’s Adaptive state sharding is based on this technology. Every 24 hours, one-third of the validating nodes in each shard are moved to a new shard. This means the blockchain operates as fragmented pieces, which allows the validators in each shard to confirm transactions at the same time. It also enhances security by preventing collusion.
But this is where the adaptive part comes in. Since the network is split into multiple shards, some shards need more participation than others. Using adaptive state sharding, MultiversX can prioritize the busiest shards and allocate the most validators and resources there. As a result, the network can process thousands of transactions a second, without pumping gas fees.
Risks of the MultiversX Network
Although it offers super-fast transaction speeds, there are also downsides to MultiversX.
Firstly, the relative infancy of adaptive state sharding poses a risk. Put simply, new features come with new challenges. Guaranteeing effective communication between shards is complicated. Then often, new features create new attack vectors too. In short, it’s still hard to know how secure this system really is until it’s “battle-tested”.
Another key disadvantage is EGLD’s allocation. With such a large amount of EGLD controlled by the team themselves, MultiversX does have some centralization risks. For example, if the tean decided to sell all of their coins, the price would crash, seeing as they own almost as many coins as are already circulating. This means the coin’s value relies too heavily on a single entity.
Finally, MultiversX has also received some backlash for changing its roadmap and allocation. While the team initially planned to launch two billion coins, it changed this final number to just two million. While this made the coin more scarce, which had the potential to make it more valuable, some criticized the team for their focus shift.
Access the MultiversX Ecosystem via Ledger
While you may be worrying about how to mitigate risks when buying and managing your EGLD, there’s actually a very simple solution: Use MultiversX wallet via the Ledger ecosystem. By installing the MultiversX app, you access the MultiversX ecosystem from the security of your Ledger device. That means your private keys stay offline, stored in the secure element chip, while you explore the blockchain apps MultiversX has to offer.
This is what you need to do to get started:
- Open up Ledger Live and navigate to the Manager tab.
- Connect and Unlock your Ledger Device
- Find the MultiversX app in the app catalog and click install.
- Navigate to your Accounts in Ledger Live
- Add a new MultiversX account.
It’s as simple as that! Now that you have installed MultiversX in Ledger Live, you can manage your assets with security and ease. However, if you want to access blockchain apps and platforms on the MultiversX network, you may also have to connect your Ledger to a third-party MultiversX wallet. This will allow you to use its interface while keeping your private keys safe with your Ledger device. For more information on how to set a third-party wallet up with MultiversX, check out our help center article here.
Exploring Currencies Like EGLD: How To Stay Secure
It seems that every day we hear of new scams and hacks shaking the crypto market. So, like storing any asset, managing EGLD requires responsibility and vigilance. The most secure option is self-custody, meaning you retain full ownership over your assets. Using a non-custodial wallet is the only option if you want true ownership of your assets.
Beyond ownership, you’ve also got to bear in mind where your private keys are stored. To clarify, not all non-custodial wallets keep your private keys safe. While a hot wallet stores your private keys on your internet-connected device, a hardware wallet stores them in isolation. This keeps them safe from online threats. In fact, Ledger devices go a step further, using the secure element to keep keys offline.
Plus luckily, with Ledger, you can confidently access the MultiversX ecosystem and navigate the world of cryptocurrencies with peace of mind. Choosing self-custody through Ledger ensures that you have the power to protect and manage your assets securely.
Knowledge is Power.
Trust yourself and keep on learning! If you enjoy getting to grips with crypto and blockchain, check out our School of Block video all about passing on your hard earned crypto.