Hello, my name is***** and I have over 20 years of experience as a veterinarian. I'm sorry to hear that your pup Momo has a swollen, red lump near his left elbow that he has been licking and is now bright red, bleeding and ulcerated.
I am glad to hear that you have placed an elizabethan collar on him to stop him from further traumatizing the area.
This is likely a hygroma. It is a false bursa or fluid filled sac with a thick capsule.
These are common in large breed dogs, especially those that lie on hard surfaces and they can get quite big.
They form over boney joints that aren't covered by a lot of tissue such as elbows, the side of the hock, very rarely the hip if the dog is quite thin. They aren't painful.
Early on in their formation you can decrease the size or at least stop it from getting much bigger by having him lie only on padded surfaces.
They can be drained but if the pressure on the joint or repeated trauma isn't relieved then they will come back.
If they get very large or ulcerate, as his has, then surgical drainage with a drain left behind is attempted but it is hard to get them to heal and they can get infected secondarily. So he likely will need antibiotics too.
I do think that some dogs are more prone to them as I have seen similar situations where one littermate will get them and the other won't.
Here are some links to pictures of hygromas. The first one is quite big and has ulcerated open:
I know that you'd like to treat this at home. You can try keeping the cone on him, making him lie on padded surfaces only and cleaning the ulcerated area with a mix of betadine solution (also called povidine iodine solution and available at the pharmacy over the counter) and warm water (mixed in a syringe so it looks like weak tea), a couple times a day, but odds are he will need to see his veterinarian to get a drain placed and oral antibiotics.
Please let me know if you have any further questions.