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Elrond is pushing for more decentralization with staking upgrade

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Staking phase 3 for Elrond (EGLD) went live on March 22nd. Since then, it has accumulated nearly $ 1.3 billion in securing the Layer 1 blockchain. This is roughly half the market capitalization of Elrond.

Overwhelming demand for $ 3 EGLD staking phase 3.

1.3 billion deployments, with more than 26,000 users securing the network.

15,000 users have staked out on their mobile phones via @getmaiar.

This is how the next wave begins

It’s time. Elrond base nodes provide space for community nodes.https: //t.co/AjK0m25zBo

– Beniamin Mincu @ (@beniaminmincu) March 30, 2021

The way to decentralization

The Elrond Staking Phase 3 was officially launched on March 22nd. Since then, a waiting list has been set up for new examiners wishing to join the network. On April 5th, the number of active validators will be increased from 2,169 to 3,200.

In addition, with the launch it became possible to create staking pools to increase the required minimum of 2500 EGLD (~ 350,000 USD) for the operation of a validator. For EGLD holders, this means that they can delegate their tokens without obligation to one of the stakeout service providers within the Elrond network.

Previously, regular owners could only delegate to nodes controlled by the Elrond Foundation. With the deployment upgrade, the number of these nodes will also be reduced to make more space for community nodes.

Delegate to the Elrond Foundation or one of the community nodes

After the 3200 slots for active validators are occupied, the validators that did not register in time for the cut remain on the waiting list and can replace any validator node that leaves the network. For most reviewers on the waiting list, however, it should be more profitable to delegate their tokens to one of the existing nodes. To ease the transition, Elrond plans to distribute an APY of around 6% to nodes on the waiting list by May 3.

With the upgrade, the Elrond Foundation is reducing the service fee for its own nodes from 19.45% to 10% and estimates the APY for delegators at 16-17%. Community nodes are free to set their service fees as they see fit. Therefore, it may be more worthwhile to delegate to one of the stakeout service providers instead.

One of these providers is Maiar, who makes it possible to store EGLD tokens on a mobile wallet. So far, 15,000 of the 26,000 delegates are already using Maiar to earn bonuses.

EGLD and BNB use in comparison

At the beginning of this year, the staking service provider Ankr set up a validation node for the Binance Smart Chain without service fees. Since then, Ankr has been the leading validator for BSC with an APY comparable to that of the Elrond Foundation nodes. However, there are some fundamental differences between using it on the Binance Smart Chain and using it on Elrond.

The Binance Smart Chain uses a delegated proof of stake consensus. This means that only the 21 most committed nodes that support them will be selected for block validation. All other nodes do not participate in the validation and will not receive any rewards afterwards. This means that retail token holders will not be able to open an active Validation Node unless they can increase the stake required to become one of the top 21 nodes.

Stakeout rewards under delegated PoS are divided equally between the validators, regardless of their total use. With pure PoS consensus models like Elrond’s, the number of validators is (theoretically) unlimited. Each validator receives rewards proportional to their effort.

In terms of network security, this means that delegated PoS is more central than pure PoS, as the minimum number of validators required for a successful consensus attack is fewer. In addition, the auditors can make arrangements to reverse transactions or even freeze accounts, which goes against the immutability principle of blockchain technology. In the past, this was the case with the EOS blockchain.

The trust problems that could result from this are mitigated by the delegators who are expected to vote only trusted nodes in the active validator set, thereby completely excluding bad delegates. For pure PoS, the barriers for bad actors to become active validators are less since anyone can become a validator node.

This is also the reason why blockchains with this consensus model often create artificial barriers such as a minimum stake or restrictions on the number of validators. In this case, holders of retail tokens can delegate to one of the active reviewers or use a staking service provider so as not to be excluded from the distribution of the rewards.

So far, the Elrond blockchain has proven that it can run without consensus attacks. Therefore, these artificial barriers can be gradually dismantled to allow for greater decentralization.

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