MultiversX: the blockchain on the scale of the internet

MultiversX, the blockchain on the scale of the Internet, or at least that’s how the project defines itself. It can also be defined as the project that divides.

We see a lot of FUD around MvX, as you know, we like to defend projects that are criticized. We think anyone with a negative opinion about MultiversX should read this artcile to understand what MultiversX is. That way, you’ll have all the information you need to either adore or criticize the flaws of this project.

Before we begin, we want to clarify that we are not a maximalist for $EGLD and that this thread is simply a technological and fundamental analysis of the project. We are not promoting it in any way.

Introduction

The MultiversX blockchain, formerly known as Elrond, is a Layer 1 pioneer in the implementation of adaptive state sharding (we’ll talk about adaptive sharding later, so don’t panic). This blockchain aims to revolutionize the cryptocurrency space by offering advanced features and technology.

History and Team of MultiversX

🔹 Foundation of MultiversX (formerly Elrond)

MultiversX was launched in 2020 by brothers Beniamin (@beniaminmincu) and Lucian Mincu (@lucianmincu). After two years of research and development, they founded MultiversX with the ambition to solve the performance and scalability issues of blockchains. The platform was designed to be fast, secure, and cost-effective, offering an alternative to existing solutions on the market.

🔹 Founding Team and Key Members

The founding team of MultiversX consists of experts in cryptography, distributed consensus, and software development. Among the key members of the team are:

➮ Beniamin Mincu (@beniaminmincu): Co-founder and CEO of MultiversX, Beniamin is a visionary passionate about blockchain and decentralized technologies. He brings essential technical and strategic expertise to the platform’s development.

➮ Lucian Mincu (@lucianmincu): Co-founder and CTO of MultiversX, Lucian is an expert in computer science and distributed systems design. He oversees the technical development of the platform and ensures that the proposed solutions are at the forefront of innovation.

➮ Robert Sasu (@SasuRobert): He is a software developer of the MultiversX Core Team with a strong technical and technological background. He is very active on Twitter, we recommend checking out his page.

➮ Lucian Todea (@luciantodea): Co-Founder and COO of MultiversX.

➮ Radu Chis (@radu_chis): Vice President of Technologies, Radu is a technical leader with experience in the blockchain field. He collaborates with the development team to ensure that MultiversX remains at the forefront of technology.

Technology and Operation of MultiversX

Now that we’ve covered the team and the backstory behind @MultiversX, let’s delve into the technical study of the project.

🔹 MultiversX: A New Layer 1

MultiversX is a layer 1 blockchain that utilizes Adaptive State Sharding and Secure Proof of Stake (SPoS) consensus. This combination enables MultiversX to offer minimal fees, high processing speed, and robust security. These terms may seem complex at first glance, but we’ll break them down.

🔹 Secure Proof of Stake (SPoS) Consensus: Role and Operation

The consensus mechanism used by MultiversX is called Secure Proof of Stake (SPoS). It stands out in how validator nodes are selected to achieve consensus within a shard and the steps these validators follow to efficiently complete the consensus process.

At the start of each cycle, SPoS selects validators to achieve consensus using a random source that cannot be predicted or influenced. This randomness source is generated from the previous block and is signed by the consensus leader of the current cycle, also known as the block proposer. The obtained signature then becomes the randomness source for the next cycle. As it depends on the immediately preceding block, it can only be known for one cycle in advance.

In each cycle, a new consensus group is selected to propose a block. Only one validator from the group will be the block proposer. This validator is chosen based on the smallest numerical value of the hash of the public key and the randomness source among the validators in the consensus group. The block proposer creates the block for the cycle, while the rest of the consensus group validates and signs it.

The time required for the random selection of the consensus group is very short (around 100 ms, often less). This efficiency stems from the deterministic nature of consensus selection once the randomness source is known, eliminating the need for communication. This allows for complete cycles in just a few seconds.

The short duration of cycles presents a security advantage: SPoS relies on the principle that a malicious actor cannot adapt more quickly than the time allotted by a cycle to influence the proposed block.

Like other Proof of Stake methods, SPoS selects validator nodes to achieve consensus based on the amount of $EGLD staked by their operators. Additionally, each validator has an individual scoring rating taken into account: staking alone can influence but not entirely determine selection for consensus. This rating reflects the specific validator’s past behavior and is considered during consensus selection: validators with higher ratings are more likely to be selected (in essence, if a validator provides good work, they receive a good rating and have a better chance of being selected). A validator’s rating is recalculated at the end of each epoch, with some specific exceptions where the rating is adjusted immediately. Thus, SPoS promotes meritocracy among validators, encouraging their operators to keep them operating smoothly. (Meritocracy = a system where success depends on personal merit rather than luck or social position)

To sign the block produced by the block proposer, the consensus group uses a modified BLS multisignature scheme with 2 communication cycles.

🔹 Adaptive State Sharding: Details on this Revolutionary Technology

ℹ️ Information : Before discussing Adaptive State Sharding in the case of MultiversX, let’s first understand what Sharding is in general:

Sharding is a technique used by some blockchains to improve their ability to process a large number of transactions efficiently. To understand sharding, let’s first roughly review the basic architecture of blockchains:

Blockchains are distributed networks composed of many nodes, generally each storing a complete copy of all transactions ever made on the network. These transactions are grouped into blocks, which are then added to the blockchain. However, this architecture has limitations in terms of transaction processing speed. Sharding comes into play to solve this problem by dividing the blockchain into several autonomous fragments called “shards”. Essentially, these are “sub-blockchains” that operate in parallel.

Each shard contains a portion of the network’s transactions. These shards can be managed independently, thus distributing the load of transaction processing across multiple networks of nodes. Therefore, sharding increases the overall transaction processing capacity of the blockchain.

The implementation of sharding can vary depending on the blockchain and its specific architecture. In some cases, each shard may be associated with a specific group of nodes responsible for validating transactions in that shard. In other cases, nodes are randomly selected to manage different shards. Transactions are then propagated between shards and can be validated independently.

To better understand what Sharding is, We like to use the analogy of a gutter system for rainwater: Think of a system of parallel gutters on a roof. Instead of a single gutter collecting all the water, several gutters are installed in parallel, each collecting a portion of the rainwater. This way, even during heavy rains, the load is distributed among the gutters, avoiding overflow. Similarly, sharding in blockchains divides the transaction processing load among several autonomous fragments (“shards”), thereby improving the overall efficiency of the system.

As you can see, sharding is considered a promising solution for improving blockchain scalability. By increasing the number of transactions processed per second, this technique is already adopted in several blockchains like Near Protocol and is also in Ethereum’s roadmap.

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Now that we’ve seen sharding, let’s look at the Adaptive State Sharding used by MultiversX:

Adaptive State Sharding is an approach that allows the blockchain to dynamically adapt to increasing transaction volume and network expansion. This means that when the demand for transactions rises, new “shards” or subgroups of the blockchain are created to process these additional transactions. Similarly, when demand decreases, certain shards can be merged to optimize network efficiency. Therefore, the number of shards is not fixed and ADAPTS, hence the name.

There are three main types: Network Sharding, Transaction Sharding, and State Sharding.

• Network Sharding pertains to how nodes (or computers) are organized into groups called shards.

• Transaction Sharding involves how transactions are distributed among these shards for efficient processing.

• Lastly, State Sharding is the most complex, as it divides the overall state of the blockchain into portions managed by each shard.

To maintain the security and integrity of the blockchain, nodes (or nodes) are regularly redistributed among the shards. This redistribution, or “reshuffling,” occurs randomly to prevent any manipulation or collusion. Redistributed nodes must undergo a synchronization period 🔄 with their new shard before fully resuming their activities.

ℹ️ Information : Collusion refers to a secret or illegal agreement between two or more individuals or entities to deceive or harm others. In the context of blockchain, collusion could refer to fraudulent cooperation between nodes (or computers) in the network, for example, to influence consensus decisions or compromise system security.

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Using Adaptive State Sharding, MultiversX can ensure that its blockchain remains fast, efficient, and secure even in the face of a significant increase in the number of transactions 📈. This approach also helps avoid bottlenecks and maintains low transaction fees, which are essential for widespread blockchain adoption.

Adaptive State Sharding will soon be phased out by MultiversX in favor of Sovereign shards. we will explain what these are in a dedicated section a little further below.

🔹 Cross Shard Transactions: Explanation of Transaction Processing Between Shards

The concept of cross-shard transactions is a key component of how MultiversX operates. It allows users to conduct transactions between different parts of the blockchain, even if their wallet addresses are in different shards.

Let’s imagine a scenario where a user wants to send $EGLD to another user whose wallet is in a different shard. To process this transaction, several steps must be taken, involving the relevant shards and the meta-chain.

Firstly, each blockchain block consists of a header and a list of miniblocks for each shard. Miniblocks contain the transactions themselves, organized based on sender and recipient addresses. When a user initiates a cross-shard transaction, it is included in a specific miniblock associated with the sender’s shard and the recipient’s shard.

The processing of cross-shard transactions occurs asynchronously. Initially, validation and processing take place in the sender’s shard. Then, the meta-chain is engaged to validate the block containing the miniblocks involved in the transaction (This involves creating a new meta-block containing information about each miniblock in the original block). Once validated, the block is sent to the recipient’s shard, where transactions are executed, and the result is sent back to the meta-chain for finalization.

🔹 MultiversX Virtual Machine: MultiversX WASM VM

The MultiversX WASM VM is the virtual machine developed by MultiversX to execute smart contracts on the blockchain. This VM is designed to be both fast and secure, while offering maximum flexibility to developers.

One of the main features of the MultiversX WASM VM is that it executes the WebAssembly (WASM) language, meaning it can run smart contracts written in any programming language that can be compiled into WASM bytecode. However, MultiversX only supports writing contracts in Rust, a language known for its security and performance.

The VM provides a complete development environment for developers, including a Rust framework for clean and efficient smart contracts, as well as a declarative testing tool. Additionally, developers have access to a dedicated IDE for an optimal coding experience.

ℹ️ Information : An IDE stands for Integrated Development Environment, which is software that combines several tools to facilitate the development of computer programs.

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The MultiversX WASM VM is a stateless virtual machine, meaning that when a smart contract is executed, it is not allowed to write directly to the blockchain or storage. Instead, the modifications introduced by contract execution are accumulated in a transient data structure, which is then applied to storage and/or the blockchain only at the end of execution and if successful. This ensures that the overall state remains unchanged until execution is completed.

To ensure fast execution of smart contracts, the VM uses Wasmer as its execution engine, an on-demand compiler that enables contracts to run at near-native speed. Wasmer has been modified to add a precise opcode counting mechanism for individual WASM opcodes, thus allowing efficient execution cost control. Additionally, the VM supports asynchronous calls between smart contracts, enabling contracts located on different shards to communicate seamlessly.

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ℹ️ Information : If you’re wondering, “What are WASM opcodes?” read this: 👇

WASM opcodes are low-level instructions used in the WASM language to describe the operations that the WASM virtual machine must perform when executing a program. These opcodes are used to manipulate data, perform calculations, manage memory, and carry out other fundamental operations necessary for executing WASM code. Each opcode corresponds to a specific operation and is represented by a unique binary code.

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ℹ️ Information : Whoa, “asynchronous calls,” what’s this graphics card-eater thing? Let me break it down for you here: 👇

Asynchronous calls are operations where the program doesn’t block its execution while waiting for the result of a task. Instead, it continues executing other instructions while the task is being processed. When the task is completed, it returns the result, usually through a callback function or a promise, and the program can then continue executing the rest of the code using this result. This improves the efficiency and responsiveness of programs, especially when interacting with long-running operations or external resources such as network requests or disk accesses.

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🔹 Native Tokens: Introduction to Native Tokens and Their Operation

The native token standard on MultiversX is ESDT, or eStandard Digital Token. These tokens can be fungible, semi-fungible, or non-fungible, thus offering great flexibility in managing digital assets.

An important feature of ESDT tokens is that they are protocol-level managed, meaning that the mechanisms used for ESDT token transactions are the same as those used for the native token EGLD. This ensures a seamless experience for users and abstracts away the complexity of sharding implementation, as ESDT token transactions are handled similarly across all shards.

Technically, the balances of ESDT tokens held by an account are stored directly under the data tree of that account. This allows an account to hold balances of multiple types of ESDT tokens in addition to the native $EGLD balance. Furthermore, the protocol ensures that ESDT token balances are secure and cannot be modified by the account itself or by other accounts.

The Sovereign Shards

Previously, we’ve discussed the operation of Shards on MultiversX. In essence, Sovereign Shards share similarities with this model, but with a twist: they can be built by anyone (like you, your neighbor, your dog. Well, maybe not the dog, but you get the idea). Put more formally, Sovereign Shards on MultiversX are a novel approach to enable developers to deploy and manage their own shards in a highly customizable and integrated manner.

🔹 Decentralized Architecture

Sovereign Shards are autonomous sidechains (or shards) operating within the MultiversX ecosystem. Each Sovereign Shard relies on a decentralized network of validating nodes handling transactions and participating in consensus. This architecture allows for horizontal scalability by distributing workload across multiple chains, thereby reducing processing times and transaction fees.

🔹 Parameter Customization

An interesting feature of Sovereign Shards is their ability to be highly customizable. Developers have complete control over their chain’s parameters, including the number of validators, consensus rules, reward and penalty mechanisms, etc. This flexibility allows projects to create environments tailored to their specific needs while maintaining compatibility with the MultiversX ecosystem. So anyone can deploy their own sovereign shard with its own rules, conceptually akin to subnets on Avalanche 🔺 for those familiar with it.

🔹 Integration into MultiversX

Sovereign Shards are integrated into the MultiversX ecosystem, benefiting from all the features and infrastructure available on the platform. This includes access to wallets, block explorers, smart contracts, and development tools. This seamless integration simplifies the development and use of dApps on Sovereign Shards.

🔹 Communication between Shards

To enable the exchange of data and assets between Sovereign Shards, standardized protocols (like the Cross Shard technology mentioned earlier) and specialized smart contracts are utilized. This inter-shard communication paves the way for new use cases and synergies between projects hosted on different shards.

🔹 Security and Scalability

Sovereign Shards are designed to ensure a high level of security and scalability. Each sidechain operates independently, reducing the risks of network congestion and malicious attacks. Moreover, the modular architecture allows for easy expansion and efficient workload management, ensuring good performance.

🔹 Utilization of Blockchain Technology

We think you might have guessed it, but we prefer to clarify: Sovereign Shards are based on the principles of blockchain technology, including cryptography, decentralized consensus, and data distribution. Each transaction is immutably recorded on the MultiversX blockchain.

MultiversX Ecosystem

🔹 MultiversX: The Most User-Friendly L1 on the Market?

MultiversX places great emphasis on the user-friendly aspect of its ecosystem and aims to be the blockchain for mass adoption. The dApps built on it generally feature a clean and simple style, making them easy to understand. Moreover, as we have seen earlier, MultiversX is a fast and low-cost blockchain (with transaction fees averaging around ~$0.002), as you know, these two criteria are essential for mass adoption.

🔹 3 Must-Have dApps

In this section, We present the 3 must-have dApps on MultiversX, but if you want to discover the entire MultiversX ecosystem, we invite you to check out this link: https://multiversx.com/ecosystem

🔐 xPortal (https://xportal.com):

xPortal is the most widely used wallet on MultiversX, and it offers:

➮ Non-custodial: A non-custodial wallet is a type of wallet where the user has complete control over their funds, meaning they do not have to entrust the custody of their cryptocurrencies to a third party. Users retain their private keys and are responsible for the security of their own funds.

➮ Multi-chain: xPortal is not only on the MultiversX network but is also deployed on Bitcoin, Ethereum, Solana, Polygon, BNBchain…, and plans to deploy on as many chains as possible. This allows for storing native $BTC, for example. Additionally, xPortal also enables cross-chain swaps, meaning you can exchange $ETH on the Ethereum blockchain for $EGLD on the MultiversX blockchain, for example.

Furthermore, thanks to Chain Abstraction, xPortal allows interaction with multiple different blockchains such as Polygon and Solana using the same wallet without worrying about which address you are using, which network you are on, etc. When you create an xPortal account, you need to provide a username (an ID) that replaces your wallet address. With this ID, you can interact with different chains without needing to worry about the wallet, address, and chain you are interacting with. This concept is heavily pushed by the Near Protocol project, but the basic idea originates from MultiversX and is already implemented and used on MultiversX.

➮ Security: xPortal is an ultra-secure wallet with features such as on-chain 2FA or the Invisible Guardian.

➮ Additional Features: xPortal also includes messaging functions, AI, and much more. It’s not just a wallet; it’s an all-in-one dApp that is definitely worth trying out.

🦅 Hatom protocol (https://app.hatom.com):

@HatomProtocol is a lending/borrowing and liquid staking dApp on MultiversX. It’s a well-designed, smooth, and easy-to-understand dApp that offers very attractive yields on various cryptocurrencies. Moreover, it’s worth noting that Hatom Protocol is one of the most audited protocols in Web3. We suggest you check it out; recently, we saw there was a 30% APY on stablecoin 😏

🔄 AshSwap (https://app.ashswap.io/swap/):

@ash_swap is a DEX + stable-swap + DEX Aggregator that also enables perps DEX functions on MultiversX.

MultiversX and Security

When it comes to MultiversX, it’s impossible to ignore its robust security measures (and we mean that in the strongest terms). MultiversX is among the few blockchains that have never experienced a hack. Some might argue that MultiversX simply doesn’t attract hackers or come up with other flimsy excuses, and we might have almost believed it until we delved into the security protocols implemented on MultiversX.

🔹 On-Chain 2FA, a First for a Blockchain

The on-chain 2FA (two-factor authentication) on MultiversX is a true game-changer in blockchain technology. It offers enhanced security for the protection of digital assets. On-chain 2FA practically makes it impossible for your funds to be stolen, even if an attacker manages to obtain your secret phrase. Some statistics: at present, 0 MultiversX wallets with on-chain 2FA have been compromised.

➮ How Does It Work?

On-chain two-factor authentication works by requiring two forms of verification for any transaction made on the MultiversX blockchain. This verification is ensured by the Guardians functionality, which acts as an additional security layer to control access to funds in your wallet. The idea is that even if someone gains access to your secret phrase, they cannot move your funds without the Guardian’s co-signature.

To activate it, all a user needs to do is to use a 2FA authentication app like Google Authenticator and link it to their wallet. In the case of the xPortal app, the device’s app acts as the Guardian, thus bypassing the need for a separate authentication app.

➮ What Is the Guardian? Is It a Person?

The Guardian on MultiversX, also known as the Trusted Co-Signer Service (TCS), is an optional security feature designed to protect users against phishing attacks and wallet compromises due to leaked secret keys. It relies on a co-signature process between the user and the Guardian, requiring integration at the wallet level.

Imagine two friends, Maxime and Sara, each with a MultiversX wallet with their respective addresses. Sara asks Maxime to become her Guardian, and after his agreement, Sara sets up Maxime’s address as the Guardian. Once Guardian co-signature is enabled, every transaction by Sara requires not only Sara’s signature but also Maxime’s.

For example, when Sara creates a transaction to transfer 1 $EGLD to Alex, the transaction includes two new fields: GuardianAddr and GuardianSignature, in addition to the usual transaction details. Sara signs the transaction and sends it to Maxime for co-signature. The co-signature process can be managed by the wallet, which temporarily stores incomplete transactions pending Guardian approval. Maxime then verifies the authenticity of these transactions, asking Sara if the pending transaction is indeed hers. If confirmed, he signs it; otherwise, he can choose to reject it.

However, there are practical challenges to this approach. For instance, Sara may not want to wait for Maxime’s approval for a transaction, or Maxime may be overwhelmed with transactions from Sara and potentially from an attacker with access to his secret key. To balance security and user experience without imposing high costs, a proposed automation solution is: the use of a Two-Factor Authentication (2FA) based Trusted Co-Signer Service (TCS). In the case of the xPortal wallet, the app on the user’s device acts as the Guardian, optimizing communication and eliminating the need for the TCS service (thus no need to reach out to your friend to become your co-signer).

➮ Flexibility and Security Upgrades:

Guardians can be activated from multiple MultiversX wallets, providing flexible security measures tailored to each user’s needs. This feature is designed to be easy to activate and use.

➮ Invisible Guardians:

Invisible Guardians are a variation of the Guardians feature specially designed for xPortal users. They act as an additional security layer, protecting the account in situations where the secret phrase has been compromised.

EGLD Tokenomics

🔹 EGLD Utilities and Statistics

➮ TGE: At the Token Generation Event (TGE), 20,000,000 $EGLD were initially issued.

➮ Total Supply: eGold or $EGLD is the native token of the Elrond blockchain. Its total supply is set at 31,415,926 EGLD, which are distributed gradually over time.

➮ Circulating Tokens: Currently, 90% of $EGLD is in circulation. It’s quite rare to see a project with a circulating supply exceeding 60%. For comparison: • $SOL has an infinite supply. • $AVAX has a circulating supply of 59%. • $ARB has a circulating supply of 15%.

➮ Utility: EGLD is used to pay for transaction fees, smart contract fees, and to participate in the Elrond network as a validator or delegator. Additionally, it is also used for governance functions within the Elrond ecosystem. To vote with your $EGLD in governance, you can do so here: https://governance.multiversx.com

➮ Inflation: Unlike some blockchains, Elrond uses a deflationary rewards approach for validators. The minting of EGLD (inflation) is offset by the sum of transaction fees. For example, if 100,000 $EGLD are to be minted according to the inflation schedule in Year X, but the sum of network-wide transaction fees for Year X is 75,000 $EGLD, only 25,000 new $EGLD will enter circulation. Such an approach is quite rare in crypto, which speaks to good tokenomics. EGLD is thus a deflationary crypto.

🔹 Tokenomics

➮ As usual, we will provide you with the pie chart illustrating the distribution of EGLD tokens.

➮ We’ll also provide you with a link to Token Unlock (an application providing extensive information on tokenomics, including token unlocks). https://cryptorank.io/price/elrond-gold

➮ Additionally, we’ll give you a link to CryptoRank (which is an application providing extensive information on tokenomics and focusing on vesting, private investor statistics, etc.). https://token.unlocks.app/elrond-erd-2

In conclusion, we see MultiversX as a robust project with solid foundations. Certainly, it receives a lot of criticism, mainly because it’s not well-known outside of France and Romania. However, we view this as a positive sign, indicating that MultiversX has yet to fully tap into its potential and can still capture the American and Asian markets. In comparison, projects like Algorand are already widely recognized but seem to lack new strategies, thus losing significant traction without a solution to elevate the project.