Doing business with Elrond (EGLD) at this time might be the best decision you could ever make. This, at least according to the current APR of over 1500% on Maiar Exchange for EGLD – MEX. But before you can do that, let’s talk about Elrond for a second.
Elrond is, for all intended purposes a blockchain. It uses the EGLD token and has garnered incredible success. EGLD or eGold was so successful that it increased to 300% of its value in the first 5 months from its launch.
Elrond was first created in 2017 in Sibiu, a city in Romania. They describe themselves as : “A highly scalable, fast and secure blockchain platform for distributed apps, enterprise use cases, and the new internet economy”. The Elrond network believes in true decentralization. They aim to do this by being the first network to implement a state, network and transaction sharding. In this way they can grow strong enough to compete with the likes of Ethereum, Zilliqa, etc.
Elrond tries to solve some problems that have been reoccurring in the crypto community. One of them is to make transactions instant and cost effective. For example, in recent times, Ethereum users are disgruntled because of the increasing transaction fees. On the other hand Bitcoin having a congested network has been the focus of complains about slow transactions. Elrond tries to resolve these issues by providing a secure and efficient platform for the transactions.
Another issue which Elrond wishes to address is the energy and computation requirements. As we know, the process of mining can sometimes require huge hardware setups that consume a lot of energy. The mechanism in place that guzzles so much energy is called Proof-of-work.
This is where a new mechanism called Proof-of-stake comes in. It is made with minimum energy consumption in mind. Because of this, it removes the high entry barrier for people that want to get into the mining business. Elrond uses a modified version of the mechanism called secure Proof-of-stake and it makes them faster, secure and fair. Secure Proof of Stake (SPoS) – consensus has proposed a novel approach in order to eliminate PoW computational waste. It combines eligibility through stake and rating with random validator selection, and an optimal dimension for the consensus group.
A strong decentralized structure
By combining the decentralized structure with cross-chain interoperability, Elrond reduces the possibility of a single point of failure that may impact the whole system in the worst cases. The network runs on 2169 validator nodes, split into four shards, capable of executing 5,400 transactions per second each and a coordination shard.
The architecture behind Elrond is comprised of Shards, Metachains and Nodes. Shards are the smaller partitions of the Elrond network which are used for scaling. Each shard processes only a fraction of transactions, simultaneously with other shards. The shards are responsible for executing accounts, smart contracts, blockchains, etc, which plays a crucial role in scaling.
The next comes the Meta chain, which is nothing but a blockchain that runs on a special shard. The main aim of this blockchain is not to process the transactions but to authenticate the processed block. Also, it takes care of the communication between the shards, maintains the registry of validators, rewarding and slashing
The last is the Nodes, which are an integral part of the network. In fact, many nodes, which can be a smartphone, a computer, or a server, come together to form a network. Among these nodes, some act as validators while some as observers. Hence providing different levels of support to the network and earn rewards for their work.
Why consider EGLD now? – Presenting MAIAR
This might be de single most crucial moment to invest in Elrond and this is because of the new arrival: Maiar . Maiar is a digital crypto wallet and global payments app that allows you to exchange and securely store money on your mobile phone. A crypto wallet is essentially a place where you can safely keep your cryptocurrency. There are quite a few types of crypto wallets. The most popular ones are hosted wallets, hardware wallets and non-custodial wallets.
Maiar is a non-custodial wallet. This means that Maiar:
- Is a decentralized wallet and you, and only you hold the keys to your cryptocurrency wallet.
- Is a user controlled wallet so only the user has control over their funds.
- Has access to DApps unlike hosted wallets.
- Does not keep any personal information.
Maiar acts as a bridge that connects to individual blockchains via their nodes. Every blockchain has their own set of public addresses. These addresses are where the crypto are encrypted and stored. Maiar does not hold or control any crypto, it just gives the user access to it. Maiar is also free to download and fees are all paid to the miners or validators.
The Maiar Exchange is the DEX AMM platform developed by Elrond Network. Combining powerful UX, intuitive design, scalable infrastructure and compelling incentives, the Maiar DEX is the fully community owned platform that will bring DeFi adoption to an internet starved for decentralization.
So why trade now? Elrond is the high throughput blockchain that can scale beyond 100,000 transactions per second. They can do this at low latency and negligible costs. And they just announced a 1 billion dollars liquidity incentive program to supercharge the launch of their Maiar DEX Decentralized Finance (DeFi) platform.
This is perhaps the largest DeFI incentive program to date. It represents a strong step toward pushing DeFi adoption beyond the current boundaries of the crypto space, into the mainstream. The incentives will be denominated in MEX, the Maiar DEX utility and governance token. Therefore $1.29 billion dollars worth of MEX tokens – of which $282M in the first month – will be distributed to Maiar DEX users who will provide liquidity in EGLD, MEX, and USDC tokens. The program started on November 19 and it won’t be long until everything becomes peaceful again. With this massive incentive program, Elrond intends to create one of the strongest and fastest liquidity bootstrapping mechanisms. More and more people are getting on board the hype train which can go one of two ways.
So how can I get 1500% out of my cryptocurrency?
The majority of people started their crypto trading journey on a centralized exchange. Some of the more well know ones are Binance, Coinbase or Kraken. You probably already know how to buy and trade a token. But let’s see the difference between a CEX (Centralized exchange) and a DEX (Decentralized exchange).
A CEX is ruled by one unique entity on their own database. This kind of contradicts the whole idea behind the blockchain which was to eliminate the middle man. By using CEX, most of the times, you will be asked to give your personal banking information in order to make a transaction. This takes away the anonymity promised by the blockchain. This along with KYC (Know Your Customer) and AML (Anti-Money Laundering) can cause downtime and loose precious seconds for people trading cryptocurrencies.
The Major difference between CEX and DEX is the fact that DEX’s back-end is built directly on the blockchain. This eliminated the need for a third party so the responsibility and control of your funds is all on you. DEXs as Maiar Exchange, allow anybody to create a liquidity pool, which permits projects and small businesses to avoid going through the expensive, intricate and often unsuccessful listing process on a centralized exchange.
So How does Maiar Exchange work? AMM’s or Automated Market Makers allow users to change digital assets like EGDL or BUSD in an automated manner. Doing this eliminated the need for an intermediary. The concept which makes AMM work is the Liquidity Pool (LP) where liquidity providers add tokens. Through these pools the order book system is replaced and the users trade within the pool. Using the Maiar Exchange is pretty simple. All you need is an address created on the Elrond Network. After that in order to exchange you need to pick of token A that you want to trade. The amount is entered into the system and trough a mathematical equation you will see the amount of B tokens you will get. All transactions have a fixed percentage fee which goes to the liquidity providers.
Now Bare with us while we hope to answer all your questions in quick fire succession.
So how do I connect my wallet to Maiar Exchange?
You can connect your wallet to the Maiar Exchange in four different ways: Maiar App, Maiar DeFi Wallet, Ledger hardware wallet, keystore file (.json) + password via the Elrond Web Wallet.
What are swaps?
You can use a Swap to trade one token for another, based on the available token pairs. Because the Maiar Exchange is an AMM DEX, you will always be quoted a swap price based on the availability of tokens in a swap pool. Thanks to balancing mechanisms such as arbitrage, you will always receive a swap price that is close to the USD value of the swap, provided there is enough liquidity in the respective token pool.
What are Liquidity Pools?
Liquidity Pools are smart contracts that hold the reserve of the two tokens for a particular Swap pair. Liquidity can be deposited in token amounts that are equal in USD value. The exchange automatically calculates this ratio based on the amount typed in by the user.
There is no limit to the amount of tokens that can be deposited in a liquidity pool – the more, the better. The proportion between the token amounts is always x * y = k – read the docs for an in-depth explanation.
How to Add/Remove Liquidity
You can add tokens to the available liquidity pools by selecting the corresponding pair, i.e. TKN1/TKN2. You can only add amounts of TKN1 and TKN2 that are equal in USD value. After adding liquidity, you will receive a unique Liquidity Provider Token (LPT). You can remove liquidity by giving back your LP token. It will be burned and you will receive the amount of TKN1 and TKN2 based on the current ratio between TKN1/TKN2 (this might be different than what is was initially), plus your share of the swap fees on the TKN1/TKN2 pair for the period when you have provided the liquidity. Please refer to the Impermanent Loss explanation to understand the potential risks involved with providing liquidity.
What are the LP tokens?
An LP Token (Liquidity Provider token) keeps track of your added liquidity in a certain pool. It is a unique NFT that contains information about the amounts and time of deposit. It can be used to reclaim your added liquidity and it is burned in the process. Between the time you deposit liquidity and when you reclaim it, you can freely use the LP token to transfer it to another wallet or deposit it in a yield farm to get additional rewards. In the future you will be able to sell your LP tokens or leverage their value as collateral for borrowing money or other DeFi use-cases.
What are Farms?
Farms generate yield for liquidity providers that stake the LP tokens. They are meant to incentivize long term liquidity by providing an additional revenue stream for providers. The rewards for farms are usually provided in MEX tokens, but special farms with dual token rewards can exist.
Liquidity providers can use farms by staking the LP tokens obtained from providing liquidity in a pool. After doing this, MEX rewards will periodically become available for harvesting. The rewards can be locked for 1 year for 2x APR.
How to Use Farms?
You can deposit LP tokens in Farms to earn rewards by pressing the Stake button. For every token swap pair, a corresponding Farm is created. You can only stake TKN1/TKN2 LPT in the TKN1/TKN2 farm, for example.
Farms yield MEX rewards, which can be locked for 2x APR.
How can I stake MEX?
You can stake MEX in a dedicated smart contract, listed in the “Farms” section, and earn rewards proportional to your deposited amount. This is a unique mechanism available only for the MEX token, which is part of the MEX value capture mechanisms.
What is the difference between staking and farming?
Staking – Depositing MEX in the special MEX staking farm in order to earn rewards.
Farming – Also referred to as “yield farming”, the term refers to earning rewards for depositing LP tokens in their respective farms.
How many MEX tokens are there?
The MEX supply for Year 1 after launch will be 8,045,920,000,000 MEX tokens. The MEX token has an issuance mechanism that is designed to accelerate the Maiar Exchange adoption. It is countered by a MEX burning mechanism: 0.05% of all fees are swapped to MEX and then burned. This will lead to MEX becoming deflationary as its adoption broadens.
What are the security funds used for?
Security is a top priority. A portion of the MEX supply has been set aside for funding periodic and exhaustive security audits, as well as future bounty programs, for all the Maiar Exchange components, from smart contracts to front-end components.
What is Wrapped EGLD?
The Maiar Exchange Smart Contracts work with ESDT tokens. EGLD is the native coin of the Elrond Network and needs to be wrapped as an ESDT token to work in Maiar Exchange. Wrapped EGLD is used for each action that requires EGLD, such as swapping EGLD for another token, or depositing EGLD in a liquidity pool. The wrapping and unwrapping actions are automated by the interface.
What is the purpose of the 1% penalty for withdrawing less than 72h after a liquidity deposit?
This penalty is in place to encourage long term liquidity providing and deter liquidity manipulation. 1% is small enough to enable flexibility for regular liquidity providers and large enough to defend against repeated deposits and withdrawals, which would have a negative impact on the stability of the liquidity pool. Any action of depositing liquidity, such as adding more liquidity (consolidation) or staking rewards in the MEX farm (compounding) resets the enter moment to the current epoch. The penalty then extends for the duration of the next 3 epochs.
1 epoch = 24 hours. An epoch starts each day at ~14:30 UTC
What are the risks?
There are always risks associated with any investment and/or transaction. We here at Cryptoway believe this to be a great opportunity. Nevertheless we must warn against possible risks. Among these you have the usual: the crypto market could instantly crash because of various reasons. Governments around the world could impose high regulations on crypto which could lead to a devalue of the overall market. The technology behind it all could stagnate or hit an impasse. It’s all speculative and guess work for people that want to push trough despite all that.
The only thing you need to know about more specifically in the case of Maiar Exchange is Impermanent Loss (IL). What is Impermanent loss? Providing liquidity can be profitable, but you’ll need to keep the concept of impermanent loss (IL) in mind. IL describes the temporary loss of funds occasionally experienced by liquidity providers because of volatility in a trading pair. The bigger the volatility, the more you are exposed to IL as there is an irresistible opportunity for arbitrage, because the price in the LP doesn’t reflect what’s going on. In this case, the loss means less dollar value at the time of withdrawal than at the time of deposit. Impermanent loss is one of the fundamental concepts, it’s something that anyone who wants to provide liquidity to AMMs should understand.
There are as you can see a lot of things that could go wrong. But you know they saying: “Fortune favors the bold”. We also believe in it. Either by investing, trading or mining there are people who made their fortune by taking a chance. If you are curious about Maiar you can CLICK HERE for an introduction.