Welcome to Elrond Network AMA
Guys, we will have our AMA with the Elrond Network Team! As always we will have the AMA, first with Gio and I for a few questions. After that, we will open up the chat for all the investors and people to ask what they would like to know. Looking forward to another great AMA!
A lot of people were asking about the Elrond tech and what makes it so special, but in general, people would like to know if you already have people planning to build on Elrond; what’s your go-to-market strategy to get more devs to developing on Elrond’s Mainnet?
Beniamin Mincu CEO & Founder
I see 3 questions here. There are many projects which speak about technology, we focus on building it. The special part about Elrond is that we released the first formalized architecture combining adaptive state sharding and secure proof of stake in May 2018. We then moved forward and released the prototype, validating that we can do cross-shard transactions.
In November 2018 we made the prototype open source and moved forward to rewrite everything from scratch for the testnet. Through this, we achieved a 30x improvement in speed.
So what makes Elrond special, is that we focus on building the technology first, while others only speak about it.
We focused on 2 things with Elrond: 1 – performance: bring considerable improvement in speed and throughput, and 2 – better UX – without this, blockchain will remain confined to a small cypherpunk audience.
There are many projects looking at Elrond, some to build on it, some just to copy it. Once you see 3 orders of magnitude in performance, things change in a dramatical way. Just think how much the internet changed when it went from dialup to broadband; this is what elrond brings.
Go to market is: SHIP THE TECH, let the devs in to play with it.
The problem with the space is that in lack of real technology, projects rely on BS signalling through partnerships and other means. We build the tech. This is VERY difficult, but once this is done, it is a very big deal.
I would like to address your response on UI UX: If possible people like to see and not trust. Could you forward links and information that show your approach to the User friendliness?
Here is the blockchain prototype video from July 2018: https://youtu.be/sjwV3xCZwhQ
Just take a look at what we had more than 9 months ago. We would love to have people take a look under the hood and see the code we have built. In fact, we are already in discussion with several code reviewers and will publish results as soon as we have them.
Just note that since 9 months ago, we have improved and changed a lot of things under the hood and that makes a great difference.
Response by: Beniamin Mincu CEO & Founder
In terms of dramatic improvements in speed: If people would like to verify your testnet is there a way for them to do so, before it gets live? If not when is your testnet going to be live and what are the planned steps to secure the new Mainnet once it will be up and running?
Ok thanks, next question is about the business development side. Personally, I am convinced about the tech however need to have more clarity about your business development side. Could you guys talk a bit about your previous experience inside and outside of crypto?
Response by: Dan
Beniamin Mincu (CEO) was the 5th member to join the NEM core team, where, in 2014 and 2015, he led the product, marketing, and community efforts for 1.5 years, helping bootstrap the NEM blockchain from an idea on bitcointalk, to a global billion dollar product.
Lucian Todea is a tech entrepreneur and angel investor, with more than 15+ years experience in tech related businesses.
Adrian Dobrita has worked for leading companies such as Intel, ST-Ericsson, Continental, developing industry-grade embedded software in areas such as mobile and automotive.
At its peek Lucian’s company (soft32.com) had more than 10mil users/month.
The next few questions from me are about payment options- Blockchains are really good at value transfer and the number 1 use case for blockchains in the next few years will probably be simply: Payments. Do you guys have a good plan on how to to get more merchants onboard and get people to use Elrond to pay for things, once the tech is stable and the network is running?
Response by: Beniamin Mincu CEO & Founder
This is a great question. Payment is one of the first use cases available from day one. We have partnered with the largest payment processor in Romania, and will have 6000+ merchants accepting Elrond as soon as we launch. We have several other discussions with payment processors from Switzerland at this point, and intend to make things even more accessible for users. Step one is to integrate with payment processors and step 2 is to have a card we can give to users directly.
A better approach than the card is to integrate the mobile wallet and use elrond everywhere with that.
There have been many attempts to deliver a smart card which integrates crypto, and makes it sufficiently cheap for spending. The question of the card is a money question at first, not a technology question. In order to have one, you first need a very expensive license which makes it an option you cannot afford to pursue at first. This is why we’re going with payment processors and mobile wallets first.
Response by: Lucian Mincu CIO & Founder
There’s one more thing to add to the payments adoption. As Beniamin mentioned above, the first steps are to integrate it through as many payment processors as possible, and be able to provide a better user experience compared to centralized counterparts. As a 2nd step once a merchant achieves critical mass of customers using Elrond as currency, our plan is to get the merchants onboard to accepting Elrond as a native currency. By eliminating the middle-man, the merchant provides incentives for more users to buy from it, and the user gets a lower price for the same product compared to other payment methods such as VISA which takes 1.5% of each transaction you make as a a customer. This is not obvious because of the price calculation of the merchandise.
What is the current turnover of the 6000+ merchants and what share of that do you think Elrond could capture?
Response by: Lucian Todea COO
Those 6000+ merchants generated transactions of $400 million in 2018. Regrading how much we could capture, is hard to predict in this phase, but we believe that if we can show the benefits of alternative payments, that are faster and cheaper (no intermediary transaction fees), the adoption will accelerate.
Who are the users of those merchants? Are those new currencies an option for wide use? Do you have any kind of research for this partner/market? How do you think you can attract users to this new technology?
Response by Beniamin Minco CEO
This payment solution is actually on the local market only and crypto payments are only an option. Other issue cases include machine to machine communication for IOT economy and smart grid devices.
Touching on other use cases and IoT, you mentioned that there are many projects looking at Elrond, some to build on it. Can you give any examples of innovative projects that are planning to build on Elrond? From what we have seen so far in the DAPP space, most projects seem to be collectibles, gambling or some sort of cross between a pyramid scheme and gambling. It’s ok to have 10k+ tps but you need to be filling those with something useful.
For this we are already in discussion with several companies, exploring ways in which they could use Elrond to solve their problems. One of our partners is actually preparing a smart grid energy system and using Elrond’s architecture for this.
Another company with which we had the call last week is very big in IOT and is looking forward to our testnet launch, so they can organize a hackathon, play with the tech and see what they can use it for.
Do you have an economical business plan, use of raised funds?
Yes -> yes we do. Please contact us in private for more details.
Can you disclose which smart grid project that is @Beniamin Mincu
You (founders) self-funded this company. Do you think you’ll “cash-out” your own invested funds after upcoming-funding round?
No, this is not our approach.
I know you guys set up the company that will be hosting the ICO in Malta, can you sum up the reasons why you decided to host the raise there?
Good question. We wanted a country with clear regulation for blockchain projects and token economy. Malta was the clear choice for this.
Shotgun Questions by Community
- Which parties took part in the seed round? Any VCs?
- Do you have any plans to mitigate the risk of a dump on initial listing?
- About the private browser reward, community reward and grants/accelerator pool tokens, will those be released immediately or Is there some sort of vesting schedule?
- Are Fabio Canesin and Ethan Fast still involved in this project?
- CrytoArnie released an article warning those interested in partaking in IEO. What are your thoughts about doing an IEO ala Binance launchpad?
- We can all agree that transparency is important. I’d like to quote BlockchainBrad on his analysis of LTO Network’s transparency, “I have to commend @LTOnetwork for their level of transparency. It really is rare to see this level of openness…”. My question is: To what extent will Elrond practice transparency? Can you provide us with any specifics instead of a general PRstyle response? For example, LTO provided copies of documents as part of their transparency.
- “We focused on 2 things with Elrond: 1 – performance: bring a considerable improvement in speed and throughput, and 2 – better UX…” Where is the focus on security?
- “In fact, we are already in discussion with several code reviewers” Can you confirm that Andre Cronje is one of them?
- “no intermediary transaction fees” There’s always a fee, so who is actually paying for this fee? Is it built into the conversion rate? Are you using a 3rd party service for this or is it built from scratch?
- “At the end of the day, startups are a risky business. This is why we are not just looking for investors. We are looking for the RIGHT investors. People who understand the risks, and believe in what we are doing. There is no free launch, or path to riches without fight or pitfalls along the way.” Agreed! The question becomes, should we invest in private sale or should we wait for a dump upon listing? That is why we need to know this info.
Answers from all members of the Elrond Team
1. No funds raised. self-funded until now.
2/3. Yes, we have a vesting schedule in place and in addition, we are considering a mechanism to discourage dumping the tokens. Dump risk is mitigated by great execution. If we can show people that there is much more value in the future than what they have in the present, their choice will likely converge towards that. This is what we’re focusing on. Our lockups reflect this long term reasoning.
- Of course they are, we will announce something important on this in the weeks to come.
- IEO are just another fundraising method. We are considering the benefits of all options at this point, including an IEO for a further round. At the end of the day, we want to raise the funds, get that done, and focus on building the product.
- We believe transparency is very important in general and especially in this space. That is why we chose Malta as a jurisdiction. We are in the process to obtain a certification from MFSA (the financial authority). To obtain the certification, we will need to appoint a Systems Auditor and conduct a system audit, appoint a custodian, a VFA Agent, an auditor, have an administrative board, establish a cyber-security framework and certify the white paper, to include relevant information.(edited)
- Security is also in focus of the protocol. We are building a new secure proof of stake consensus, with 0-predictability and unbiasable random seed number generation. The random seed is used to create the consensus group in a deterministic way.
Security is of course always in the focus, all design decisions actually were done considering security, this is also why we had multiple discussions with people in the field, especially on cryptography, randomness, consensus, etc.
- @Moun_tain Good question. In addition to serious vesting schedule, we are also working with @ICODOGChris to develop a better version of bridge troll. We believe in putting game theory at good use and see what happens. At the end of the day, startups are a risky business. This is why we are not just looking for investors. We are looking for the RIGHT investors. People who understand the risks, and believe in what we are doing. There is no free launch, or path to riches without fight or pitfalls along the way.
Can you explain why you chose to go with a blockchain architecture (as opposed to for instance, DAG) whilst still trying to get as close to BFT as possible? How do you plan to compete with DAG projects that can handle much higher TPS – what is Elrond’s USP in this respect? Also, how have Elrond managed to outperform Zil (also pBFT) by so many TPS? Is this due to a different method fo dealing with communication throughput, or doing away with PoW in favour of SPoS, or something else?
We managed to outperform other blockchain protocols because we not only use the latest concepts, but we also try to improve them. SPoS is super fast comparing to PoW. We use the best P2P library and we even do a lot of optimization on the existing architectures. We use GOLANG as the programming language, which provides with a great multi-threading and communication base. The huge number of TPS also comes because of Adaptive Sharding – we are sharding state, accounts, transactions, smart-contract. So a lot of processing is done in parallel.
Projects employing DAGs are I would say newer in the space, the security for DAGs in my opinion is less than blockchain, the finality as well can be proven faster especially with pBFT in a normal blockchain vs DAG. Still we can achieve really high TPS with blockchain by employing sharding which should be sufficient for the usecases we predict. We are outperforming ZIL because we handle things differently. While they are only doing transaction sharding they end up reaching limits imposed by communication, we have tried to improve communication from the start, by doing also network sharding and data sharding.
You mentioned payments by merchants using native Elrond tokens. Given the underlying volatility in Elrond tokens, why do you think merchants will move to volatile crytocurrencies as holding assets? Isn’t issuing a stablecoin as means of settlement and payment a better option?
Response by Beniamin Mincu
Guess you seem right, but the volatility is something that will pass in time. Stablecoins are a good solution for now and maybe in the future as well. We do not expect the change to happen overnight but it is more like a 10-year process.
I know there are a lot of questions here for you guys and you are doing a great job at working through them in order. I will throw one down here for later: you mentioned that some projects are looking to copy Elrond. How do you protect against this (and forks for that matter)?
Great question. There are several projects which have announced sharded architectures, but have not delivered anything besides marketing. People may know them as Frankensteins. All these are just waiting to copy-paste the first real tech that comes out. We intend to leave them waiting for now 😉 Once we release, we will always release an older version so as to keep our edge. They can copy our past code, but at some point copying will lose value.
With the likes of Quarkchain and very recently MultiVac changing their lockups, will you potentially do the same or will you honor the lockup schedule that you will publish soon?
Response by Beniamin Minco CEO
Quarkchain oversold their tech from the start, so I’m not surprised about their moves regarding lockups. We created Elrond in a different way. We put the work in, have come up with real tech, and have done all this on our own funding. Now we’re preparing for the growth stage. The people who understand this, can come in, the people who don’t, well I guess they can look for another Quarkchain.
Will the “Malta- Company” be a subsidiary?
Will the “Malta- Company” be a subsidiary -> No. It is a standalone company, owned by a holding company.
Lucian Todea, could we have a transparent report about the holding and the relations between the companies? Who will manage raised funds? Who is the tech owner?
Yes. this should not be an issue and will be published with the Economics paper, before the public round. But we have a developing tech company, a funds collecting company, a managing holding.
We have the R&D Co. where the tech and IP is generated, who own 100% of a holding Co. in Malta, the holding Co. owns 100% Elrond Ltd, in Malta as well. Elrond Ltd. is the co. raising funds: https://www.dropbox.com/s/m9rzfrvvo63w5pk/Structure.pdf?dl=0
Hi Team, can you explain (A) How your consensus mechanism works? (B) Token utility for Elrond. How does Elrond token capture network utility and growth to reward tokenholders?
Response by Adrian Dobrita
@Code Geass A) Consensus mechanism is the part that we have improved in the recent weeks, this is not yet published, but we will update whitepaper soon. As we mentioned we are employing SPoS which is based on pBFT. Selection of validators participating in consensus is done based on an unbiasable and unpredictable randomness source, where we add the nodes rating to slightly increase chances of well behaving/honest nodes of being selected. The communication rounds we have reduced to 3 from the previous version mentioned in the whitepaper and also reduced the interactivity of the process, which improves the speed of our consensus and allows us to have more members in the group also increasing security. The randomness source we have improved, it is now based on BLS single signature. The whole process would look like this: 1. Selection of consensus group happens based on the randomness seed made available in previous round. Leader is the first validator selected in the consensus group, he proposes the block with transactions (adding the unbiasable, verifiable randomness source for the next consensus inside), and sends this to the other consensus group members. Members run the validation over the proposed block, do single BLS signatures and send back their BLS signature over the block if approved. The leader then aggregates signatures based on BLS multi-signature scheme and broadcasts the resulting block.
Response by Lucian Todea COO
Geass (B) as a tokenholder the best way to capture network utility is to become a validator by staking your tokens and getting rewards for that. The Economics Model, the first proposal, is in the works, and will be published in the next weeks.
Response By Robert Sasu
Geass The chosen consensus mechanism is secure proof of stake. In this, we combine an unbiasable and 0-predictable random number generator algorithm, which is used as input in a deterministic function for selecting the consensus group at every round (every 4 seconds). The random number cannot be altered, or changed in any way. It can be considered as a blockchain of random seeds, one leader is signing the previous number with their private key. The consensus part is based on pBFT algorithm.
Response by Beniamin Minco CEO
Response by Lucian Todea
Do you have a exchange-listing-fee allocated in your business plan?
Yes, we have budgeted some money for that.
ICO DOG Chris:
I think we’ve grilled them enough for now guys! As always, I am extremely proud of the quality of the questions that we get in our AMAs. Everybody on here has really become tough investors, prepared for the dangers of the ICO market and not just blindly following ICO DOG Reviews! Its getting late here, I am pretty tired and probably the Elrond team as well. As always, we will make a write up of all the Questions and Answers and put them up on icodog.io. If you have more questions, (which I think many do): Elrond Network has several more Interviews and AMAs scheduled for this week. Alternatively you can also head over to their Telegram channel: https://t.me/ElrondNetwork and continue to grill them over there as much as you feel like. For more information, I would suggest @Beniamin Mincu to present you guys some links and files that you can use for further research and DD and also present some closing statement.