7 min read

An Overview: the Shardeum Ecosystem

Low Fees and High Hopes!

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Published on

13 Feb, 2023


Every project in the web3 space aims to solve the infamous “blockchain trilemma” while also being affordable and user-friendly. Despite some blockchains claiming to have solved the trilemma, many still struggle with user experience issues, particularly with regard to transaction fees. In Shardeum, the transaction fee is low and fixed, allowing for a wide range of use cases, everything from P2P transactions, to decentralized social media. The world envisions mass adoption of blockchain technology for performing day-to-day activities, and with Shardeum this might just be possible. This report provides an in-depth examination of the Shardeum ecosystem, including its tokenomics and recent developments.

Shardeum is an EVM-based, linearly scalable smart contract platform that claims to provide low gas fees forever while maintaining true decentralization and solid security through dynamic state sharding. Shardeum was founded by Nischal Shetty, who has long spearheaded the web3 revolution in India, and over the last 2 years, built an organic web3 community in India composed of a market with informed consumers ready to embrace an L1.


Let’s get into the details!

At the foundation of this ambitious project is its innovative approach to consensus. On Shardeum, the consensus is reached through a combination of two distinct methods: Proof-of-Quorum and Proof-of-Stake. This method reduces transaction processing time, even for transactions that impact multiple shards, and ensures atomic processing. Validator nodes will participate in voting and “stake” their tokens to secure the network. Transactions are processed in the order they are received and grouped into blocks or partitions. Unlike other sharded blockchains like Near, the consensus is achieved at the transaction level rather than the block level, which enables faster processing. This is a direct result of Shardeum nodes being assigned dynamic address ranges across multiple shards, eliminating the need for complex atomic processing and leading to low latency and reduced network congestion.


The network’s native token is called SHARD (SHM). Like other Proof-of-Stake networks, SHM tokens can be used as stake to run a validator node, engage in DeFi and perform transactions on the network, and earn passive rewards through staking. The reward schedule for operating nodes is still under discussion since SHM will be a deflationary coin. The maximum supply of SHM has been capped at 508M, and the token distribution has been as follows:


The foundation and ecosystem allocations will be unlocked through a token generation event, around or after the mainnet launch in Q1 2023, so keep an eye out! 👀

Nodes on Shardeum, Alphabet and more!

Okay, now that we have covered some important basics, let’s explore the setup and staking process for nodes on Shardeum. Shardeum has three types of nodes: Validator, Archive, and Standby.

  • Validator nodes are responsible for validating transactions and taking part in the consensus process. They must stake SHM in order to participate and will be rewarded with SHM for their involvement.
  • Archive nodes keep the complete transaction history and may or may not have to stake SHM. They will receive a share of the network rewards.
  • Standby nodes are not currently participating in the consensus, but they help the network to quickly scale during traffic spikes. They may or may not have to stake SHM and can also receive a share of the network rewards. In the event of a traffic spike, the throughput capacity can be auto-scaled by the addition of nodes from the ‘standby nodes’ pool. This way Shardeum provides the highest throughput capacity of any EVM based L1 without sacrificing on decentralization.

Now, for the developer experience, if you have experience building for Ethereum or EVM chains, then you’ll feel right at home on Shardeum. Developers can use popular, developer-friendly languages like Solidity or Vyper to deploy contracts. Unhindered by any performance bottlenecks, developers will benefit from Shardeum’s linear scaling and low, fixed gas fees.

Launched in Q2 2022, the Alphanet Liberty, the alpha testnet for Shardeum, is a state-sharded smart contract platform with parallel EVM execution on a small scale, providing an abstracted sharding experience for developers. From its launch until Q4 2022, over 45,000 smart contracts were deployed on the Alphanet, becoming home to 105 ecosystem projects and hosting over 540,000 accounts, accounting for approximately 1.5M transactions. Apart from the network’s innovative stances on consensus and transaction fees, its unprecedented growth is also due to its low barrier to entry for nodes. Shardeum is also a pioneer among L1 networks in developing a user-friendly GUI for setting up node validators in addition to its powerful CLI tool for doing the same. Currently, a rented server for a meagre $50/month is sufficient to run a validator node on Sharduem. It is not uncommon for the organization behind a blockchain to “choose” the nodes that would run on their network. This compromises the integrity of decentralization and its meaning is convoluted by proponents of centralization. Shardeum has shunned the use of this practice and reiterates the concept of permissionlessness on blockchains through its easy, affordable, and scalable node architecture.

Betanet and recent developments!

Shardeum has had a busy and successful year since launching its Alphanet Liberty in Q2 2022. The network has seen impressive growth, with over 1.5 million transactions and 45,000 smart contracts deployed on the platform. In a private sale in 2022, Shardeum raised over $18.2M from over 50 investors worldwide. The company recently made several exciting announcements, including the launch of SharDex, a decentralized exchange built on the Shardeum platform, as well as its collaboration with Double Protocol to adopt ERC-4907. In addition, Shardeum announced the launch of ChaiDEX, another decentralized exchange built on the platform, and an integration with OKX wallet which will allow all of its users to access the dApps and the web3 ecosystem built on Shardeum.

Shardeum’s Betanet Sphinx made a roaring release on February 2nd, 2023, and this launch was met with an overwhelming response. If you are a Betanet validator, honesty might just be the best policy for you! Reliable nodes and the addresses that contribute to the development and operation of the Betanet will be duly rewarded on the Mainnet. https://twitter.com/shardeummemes/status/1623925698930044929

The launch of Betanet is surely a big item off Shardeum’s checklist, but it doesn’t stop here. With Betanet, Sharduem aims to attain its goal of community-driven growth. To that end, Betanet opens node operation for the larger public. Betanet enables the community operation of validator nodes, and the archiver nodes can be operated on mainnet launch. The Betanet will rely on these nodes, as well as dApp and project owners, to help with stress testing and provide performance feedback. The initial Betanet launch will have a capped Shard size of 21 nodes, which will gradually be scaled up to 128 nodes. Additionally, the current TPS of 150 is planned to reach 200 TPS. This launch also includes the release of the Whitepaper and the open-sourcing of the source code, further advancing Shardeum’s objectives.

Strong in its fundamentals, Shardeum has quickly emerged as one of the promising networks that could provide a scalable L1-based solution to the blockchain trilemma. Backed by some of the smartest minds in the web3 realm, a meticulously planned and tested architecture, and a thriving community of supportor and contributors, the upcoming mainnet launch of Shardeum (scheduled for Q2 2023) has the potential to transform the DeFi landscape and make decentralized finance more accessible to everyone.

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 40+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.

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