The reason for this lies in two aspects: one is the already-mentioned Launch of the Mainnet and on the other, the fundamental changes in the economic Design of the crypto-currency
We begin with the Mainnet. Not only Cardano, but also Elrond yesterday celebrated the Launch of the official Mainnets. The first application that will run on the Blockchain, it means elves of Aman. This is a “distributed financial application that should allow different types of transactions between users.”
If this sounds a bit too complex, a simple explanation: With the help of the elves of Aman, can output user ERD Tokens or punting. In addition, you can buy through the App, and the use of Elrond’s virgin EARTH Token over 150 Fiat currencies.
It is important to mention that the elves of Aman, at the moment, although already available, but not yet complete. The complete Rollout over a period of several months. According to its own information, there are already over 40,000 were the end users.
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EARTH inherits properties of Bitcoin
At least as exciting as the Launch of the Mainnet with the new design of the ERD is. Elrond has revised the economic Design of the native crypto-currency strong. It now relies on elements that we already know of Bitcoin. What this means in Detail, let’s look at now:
An important part of a crypto-currency, the process of creation. How many tokens occur in a certain period of time, and how are these distributed? Bitcoin has solved this aspect clearly. New BTC arise in the context of Mining and the newly created supply is regularly cut in half.
Scarcity and Stock-to-Flow for Elrond
Elrond was here, in this respect, inspire, as deflationary elements come to the fore. This means that the amount of EARTH that will be created decreases over time. Put differently, The inflation rate decreases drastically with time.
While the Token output (engl. token issuance) is currently at 20 billion ERD, it should be in the course of time, to 20 million in reduced. The decline should be over the next 10 years was 10.8% p. a. From the 11th year, there will be no new EARTH more.
So that we can also apply the concept of Stock to Flow to Elrond (ERD). Under the current circumstances, the S2F-value of ERD would be in 5 years, already at 275 and thus far above the of Gold or Bitcoin.
Of course, a scarcity is created by this Change of the token issuance. On the other hand, I conclude not directly a price increase, since the demand-side must be sufficiently high.
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