The competition on Blockchains is taking shape, and just like any other business, all blockchains strive to provide users with the best services. Looking at these two blockchains, they are aiming to achieve better security, faster speed, more cost-effective, and highly scalable platforms for the benefit of their users.
ETH 2.0 is being designed to transfer the blockchain from Prof-of-Work (PoW) to the proof-of-stake (PoS) consensus mechanism, which is in line with the shift of their current mining model to a staking model. Elrond, on the other hand, has been receiving attention lately as their mainnet with PoS is already rolled out. Their primary focus has been scalability, speed, low transaction cost. Elrond mainnet launched and is currently hosting 3200 validators to serve the blockchain.
This brings us to the concept of staking. Staking can be defined as the process by which blockchain users actively engage in transaction validation on a PoS Blockchain. It involves holding a certain amount of crypto tokens on the network to participate in the network and obtain a reward in return. The process involves locking up a particular amount of a given cryptocurrency coin in a wallet to participate in the operation of a blockchain and receive rewards in return.
Theoretically, users of a Blockchain that enables PoS consensus are required to have a specific balance of cryptocurrency coins to be considered a validator. Participating in the validation process earns a user staking rewards. Based on ETH 2.0 and Elrond, anyone using either of the platforms can become a validator, as long as they meet the respective threshold, and consequently earn staking rewards offered by these networks. PoS has several variations to determine a user’s qualification to stake on their network of choice.
Staking on Ethereum 🤔
When Mainnet switches to POS by 2022 as planned, the move is expected to improve the network’s scalability and security. This will make it possible for users to stake on Ethereum and earn staking rewards.
Staking on Ethereum will be just like it’s done on most other platforms, as they all follow the lock-load and wait for principle. But staking on Ethereum’s new POS consensus is expected to be fairly straightforward, with a minimum threshold of 32 ETH required to participate in staking. In the process, validators will be required to run a validator node. The good thing about the process is that it will not require some special computing system as Bitcoin’s Proof-of-Work (PoW) does. PoS works can work fairly well on a consumer-grade computer or laptop. The major requirement is that validators will have to be online consistently to remain relevant and avoid minor penalties.
The rewards for staking on Ethereum are estimated to be between 3-7.5% APR on any ETH that you stake to help secure the network. It works on the principle of demand and supply, where the amount given as staking rewards is dependent on how much ETH is currently validating on the network. Little ETH staked means good rewards to incentivize more users to come online. More ETH staked on the network means low rewards.
Staking on Elrond 😍
As earlier stated, the Elrond network is a public blockchain developed to provide more scalability, interoperability, and high throughput. The primary goal was to create a decentralized network that can provide better performance than other competitors like Bitcoin and Ethereum while putting the high standard of user privacy into practice.
Staking on Elrond takes place in either two ways: as a validator or delegator. To be a validator, a user must be able to run a node and stake 2,500 eGold. On the other hand, to be a delegator, a user must provide a minimum of 1 eGold per delegation. As a delegator you delegate eGold to a Staking Provider who will run validators for a pool of delegators. The network automatically distributes validator rewards and subtracts the fee of the staking provider with a smart contract. Delegator rewards are claimable once per day, with no time limit for claims.
Elrond network has fixed reward amounts for validators and delegators. These rewards are derived from the network reserve pool and given based on the automated distribution mechanism. It must be noted that Elrond staking is trustless and transparent, and one must own eGold tokens in their wallet to participate.
With delegation to a Elrond staking provider, there is no permanent locking up of your eGold. However, you will have to wait for 10 days once you send your withdrawal request.
Although staking Elrond is very safe, there are two general risks. One is slashing of your validator and the other is your personal access to your wallet. The first is a security action of the network to keep validators from misbehaving, you can see it as punishment for misbehaving. So you better search for a trustworthy Staking Provider. The second could be the possibility of a user losing control of their private keys. But this mishap can be managed when one adopts diligent private key management, such as multiple backups.
Differences between Ethereum and Elrond 🥜 vs 💰
Scaling and throughput are ideally one of the biggest concerns facing some of the largest blockchain networks today. We’ve all witnessed some Blockchain Networks bloat, leading to frustrations that come with low throughput and slow transactions.
Although ETH 2.0 network is being designed based on PoS and sharding mechanism, just like Elrond, there are some remarkable differences between the two networks.
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.
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 synchronization 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.
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.
Despite having a much less community base, Elrond has experienced some remarkable growth in terms of community involvement over the last year. So far, 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. Moreover, the blockchain network does not position itself as an Ethereum competitor, but rather as a network built with technological prowess to solve some of the pressing issues affecting internet users on a larger scale.
If you also want to receive rewards you can stake your eGLD with ProCrypto as a Staking Provider by one of the following steps:
1. Use delegation manager:
– You select your login method to login to your Elrond Wallet
– Clock “Delegate” on the right
– Enter the amount of eGLD to delegate
– Re-enter your password for the security check
– Confirm the prepared transaction
– You are back to the Delegation Manager
– When your Transaction is processed you will see your active delegation here.
– Login to Maiar
– In your Vault click the “Earn” Button
– Click “Stake”
– Search for “ProCrypto” and click the result
– Continue and enter the amount of EGLD to delegate