MultiversX, formerly Elrond, is a blockchain that uses sharding to support fast, cheap, and high-volume, affordable on-chain transactions.
MultiversX, formerly Elrond, is a blockchain that uses sharding to support fast, cheap, and high-volume, affordable on-chain transactions.
Although Ethereum was the original layer 1 (L1) blockchain that supported smart contract functionality, many have followed in its footsteps and built on its foundational technology. These base chains—like Solana, Avalanche, and Polkadot—seek to improve on the functionality of Ethereum, but each balances security, scalability, and decentralization in different ways. Their ecosystems are meant to support decentralized applications (dapps) and facilitate user activity in burgeoning spaces like decentralized finance (DeFi).
MultiversX is an L1 chain that grew out of a project called Elrond. It uses its own Proof of Stake protocol and a technique called adaptive state sharding to split its chain into smaller parts, allowing it to process more transactions efficiently. This translates to quick and cheap transactions on its network. Its eGold (EGLD) cryptocurrency is used as a store of value on the network, for paying transaction fees, and rewarding those securing and participating in the network.
How was MultiversX developed?
In 2018, MultiversX started under a different name: Elrond. The name drew inspiration from a character in the popular Lord of the Rings series, and multiple other components of its architecture were also references to the series. Elrond’s stated goals were to build an “internet-scale” blockchain network with increased capacity compared to prior L1 blockchain efforts.
Elrond launched a mainnet in mid-2020. During that process, the project converted all its original utility tokens (ERD) to Elrond Gold (EGLD). Over the ensuing two years, it launched a virtual machine, incorporated smart contract functionality, acquired a Romanian payment firm, and launched a cross-chain bridge.
In November 2022, Elrond officially became MultiversX. The rebranding occurred just one year after Facebook’s rebranding to Meta, in a year filled with speculation about the popularity of the metaverse. Ostensibly, the new name was intended to align with the community’s excitement about metaverse-related technologies, showing the project was adapting to an ever-changing landscape. “Elron Gold” became “eGold,” maintaining the EGLD ticker symbol.
MultiversX is led by co-founder and CEO Benjamin Mincu, who studied economics in Romania before entering the blockchain space. Before MultiversX, he co-founded and served as CEO of a digital asset investment fund. In 2019, Elrond raised over $3 million in an initial exchange offering (IEO) on the Binance Launchpad. The same year, it held a private token sale that raised $1.9 million.
How does MultiversX work?
MultiversX’s architecture includes multiple variations on the common designs seen across the crypto landscape. These changes are implemented with the goal of making the network capable of handling large volumes of transactions at fast speeds—all while maintaining decentralized security.
The three main components of MultiversX that make it unique are: adaptive state sharding (a scaling method), Secure Proof of Stake (a consensus mechanism), and the Multiverse Virtual Machine (a framework that supports smart contracts).
Adaptive state sharding
“Sharding” generally refers to splitting a blockchain into smaller pieces (shards) that can independently add and process transactions on the network. Although transactions might have to wait in one long line on a traditional blockchain, sharding opens up new lanes and makes each line shorter, allowing transactions to be processed more quickly. MultiversX’s adaptive state sharding attempts to be even more efficient by adjusting and balancing shards based on supply and demand.
Secure Proof of State (SPos)
Proof of Stake (PoS) has become the most popular model for a network to reach consensus and maintain security. MultiversX builds on Algorand’s PoS, in which validators are randomly selected to process transactions and add blocks to the chain. It further speeds up this process by choosing these validators more quickly, all while spreading validators among the shards.
MultiversX Virtual Machine (VM)
In order to have smart contract functionality, developers must be able to write executable code (programs). MultiversX uses the K Framework, which is a tool that allows for support and cross-interpretation of multiple programming languages. Therefore, it can support smart contracts written for the Ethereum VM as well as code written in common languages like C/C++ and Rust.
How is the EGLD token used?
Just like many other L1 cryptocurrencies, EGLD is used for multiple purposes: as a store of value, for payments, staking, and rewarding validators in the PoS network. In this way, it can be considered equivalent to ETH on the Ethereum network. An EGLD-compatible wallet is needed to transfer and use EGLD. MultiversX ensures extra security with “on-chain” two-factor authentication (2FA), which assigns a “Guardian” (in the form of an authenticator app) to double-sign transactions and prevent funds from being stolen.
Token distribution and economics
There is a maximum supply of 31.4 million EGLD. Of these, 25% were sold during the public IEO, 19% were sold to private investors, 19% were allocated to founders and core members of the development team, 17% were placed into a reserve treasury, 8.5% were marked for marketing purposes, 7% were allocated to ecosystem rewards, 2.5% were given to advisors, and 2% were placed in a community fund.
According to Elrond’s 2020 documentation, the initial supply of 20 million EGLD would be subject to a 10-year inflation plan. Through staking rewards, this set an initial inflation rate of approximately 10.8% over the course of the first year, with inflation slowly decreasing over a decade to 0.57% in the final year. After this, the full maximum supply would theoretically be reached.
Conclusion
MultiversX is a layer 1 (L1) blockchain that was originally called Elrond and focuses on speed and scalability.
The three main components of MultiversX’s architecture are adaptive state sharding, Secure Proof of Stake, and its own virtual machine.
MultiversX’s native cryptocurrency is EGLD (“eGold”), which is used for staking, rewarding validators, and storing and transferring value on the network.