What is Zilliqa (ZIL), how does it work and why is it gaining popularity?

What is Zilliqa (ZIL)?

Zilliqa is a public blockchain that addresses scalability and throughput challenges seen in cryptocurrencies like Bitcoin and Ethereum. It utilizes sharding to enhance transaction speed and create a scalable, secure platform by dividing the network into nodes that process transactions simultaneously.

Developers of Zilliqa claim it's the first blockchain to rely solely on sharding for scalability, a claim they believe it achieves successfully. According to the white paper, sharding enables Zilliqa to achieve transaction speeds about a thousand times faster than Ethereum.

As a permissionless blockchain with high throughput, Zilliqa allows developers to deploy decentralized apps and smart contracts without the congestion or high gas fees often seen in older blockchain platforms.

How does Zilliqa work?

At the core of Zilliqa's design is its use of sharding technology to alleviate congestion. Sharding involves dividing a network into multiple clusters of nodes, or shards. This enables miners to verify transactions concurrently. Essentially, shards can process transactions independently, avoiding the slowdown that occurs when processing transactions in a single large group, as seen in many other cryptocurrencies. In a sharded network, increased size leads to faster transaction processing, as more shards can handle transactions simultaneously.

One challenge of sharding is achieving consensus for transaction verification. In some tokens, such as Bitcoin, the consensus protocol requires agreement from half of the nodes to verify a transaction. This process can be cumbersome. Zilliqa, however, avoids this issue with its hybrid consensus mechanism, which is faster and less computationally intensive compared to legacy blockchains like Ethereum and Bitcoin. 

Zilliqa's approach delegates verification to the shard level, where nodes don't need to process entire blocks of data. To ensure the validity of this verification process, Zilliqa employs a second layer where a group of nodes forms a delivery service committee. This committee combines the smaller blocks into a single entity and has access to the entire blockchain to validate the verification process.

Who founded Zilliqa?

Zilliqa was established in 2017 and its ERC-20 token was first offered for sale in January 2018. These tokens were later moved to the Zilliqa mainnet, which was launched in 2019. The token swap process was completed in February 2020.

The concept of Zilliqa originated from the work of Prateek Saxena, an acclaimed research professor at the National University of Singapore. Saxena, along with several of his students, published a paper in 2015 that explored the potential of a sharding blockchain to enhance network speed and efficiency, laying the groundwork for Zilliqa.

During this period, Saxena joined forces with Max Kantelia, a technology and finance entrepreneur with an engineering background, and Juzar Motiwalla, a venture capitalist with experience in technology startups, to establish Anquan Capital. In 2017, Anquan founded Zilliqa Research, which developed the Zilliqa network. Leveraging their connections with the National University of Singapore, Zilliqa Research initially brought on board Dong Xinshu as CEO, Amrit Kumar as Chief Scientific Officer, and Yaoqi Jia as Chief Technology Officer – all associated with the university’s School of Computing.

Both Anquan Capital and Zilliqa Research hold significant reserves of ZIL.

What makes Zilliqa unique?

The developers behind Zilliqa claim it is the first public blockchain to fully rely on a sharded network. They also assert that Zilliqa's high throughput and transaction rates could potentially rival traditional centralized payment systems like VISA and Mastercard.

Thanks to its sharded structure and hybrid consensus mechanism, Zilliqa aims to become the preferred blockchain for developers working on solutions for large-scale enterprises in various sectors, including financial services, gaming, and advertising.

Additionally, Zilliqa is programmed in a custom language called Scilla, which is designed to enhance the security of the entire network automatically.

What is the value proposition of Zilliqa?

Zilliqa tokens (ZIL) serve as a store of value and a medium of exchange. Additionally, users can earn rewards by staking a portion of their holdings. Those who hold Zilliqa and stake some of their tokens gain the opportunity to participate in the governance of the Zilliqa ecosystem, with their voting influence corresponding to the amount of ZIL they stake.

Furthermore, the token's limited supply prevents its value from being diluted by unlimited inflation, potentially establishing it as a reliable store of value over time.

How many Zilliqa coins are currently in circulation?

Currently, there are 18,404,978,750 ZIL in circulation, which represents a portion of the total supply.

Prior to its launch, Zilliqa generated 60% of the total supply and allocated portions as follows: 10% to Anquan Capital, 12% to Zilliqa Research, and 5% to current and future members of the Zilliqa team. The remaining 40% of ZIL will be created through mining.

The Zilliqa blockchain development team projects that all tokens will be mined within ten years of the launch, with mining rewards decreasing gradually over time.

Other technical data

To enhance the Zilliqa network's access to real-world data, the development team has partnered with Chainlink, enabling the integration of oracles. These oracles will enable smart contracts to fetch data from sources beyond the network, including other blockchains or real-world events.

This integration offers a decentralized solution with enhanced security. Since the data comes from multiple nodes within the network, there is no central point that could be susceptible to failure or attack.

The Zilliqa team anticipates that integrating Chainlink will open up new possibilities for users, including decentralized exchanges, trading platforms, and other crypto-based financial services. While the primary purpose of Zilliqa's dedicated Chainlink adapter is to access current market prices, it could also facilitate access to a variety of other datasets, such as exchange rates, election results, and weather forecasts.

What measures ensure the security of the Zilliqa network?

Zilliqa incorporates several unique security features to protect the network against various threats. One key aspect is its use of a practical Byzantine Fault Tolerant consensus mechanism, which employs two layers of verification. The first layer prevents Sybil attacks by having shards process only macro-blocks, not the entire blockchain. A second layer provides final verification and prevents hard forks in the network.

Furthermore, Zilliqa uses elliptic-curve cryptography to secure its transaction records and utilizes a Proof of Work algorithm for shard generation and node identity assignment.

Moreover, Zilliqa's custom coding language, Scilla, plays a crucial role in network security. Scilla automatically detects and removes security threats in applications written with it, ensuring they are safe to run on the Zilliqa network. This security check is performed at the language level, simplifying the verification process for smart contracts and instilling confidence in developers.

How to use Zilliqa?

Zilliqa is a public blockchain open for use by anyone, but it's particularly attractive to developers creating high-volume smart contracts and decentralized applications (dApps) to leverage its fast transaction speeds. The blockchain finds applications in high-volume automated auctions, decentralized exchanges, high-performance scientific computing, and tasks requiring precise results.

ZIL is the token that powers the Zilliqa blockchain, used for executing smart contracts, rewarding miners or stakers, and covering transaction fees. Some users may choose to hold or trade ZIL as an investment.

The developers have introduced staking with ZIL to enhance decentralization. Stakers receive rewards and gain governance rights. The team has partnered with exchanges and wallets to enable staking, known as Staked Seed Node Operators. Users can stake any amount of ZIL, with a minimum of 10 ZIL.

How to choose a Zilliqa wallet?

While you can store Zilliqa in any cryptocurrency wallet you're comfortable with, the Zilliqa team recommends several digital and online wallets, including dedicated ZIL wallets like Zillet or ZillPay Wallet.

For hardware wallets, Zilliqa is compatible with Ledger, providing secure offline storage and backup. However, these wallets may be more suitable for experienced users with larger amounts of ZIL due to their technical complexity and cost.

Software wallets are free and easy to use, available as smartphone or desktop apps, and can be custodial or non-custodial. Custodial wallets manage and back up private keys on your behalf, while non-custodial wallets store private keys on secure elements of your device. Software wallets are convenient but less secure than hardware wallets.

Online wallets, or web wallets, are also free and easy to use but less secure than hardware or software wallets as they are hot wallets accessible via web browsers. It's important to choose a reputable platform for online wallets, suitable for smaller amounts of ZIL or frequent trades.

Kriptomat offers a secure storage solution for ZIL, allowing storage and trading with enterprise-grade security and user-friendly functionality. Buying, selling, or trading ZIL on Kriptomat is fast and secure.

Zilliqa proof of work

While Zilliqa does utilize Proof of Work for establishing node identities and implementing sharding, it diverges from using it for achieving consensus. This approach offers several benefits, notably the avoidance of high energy consumption associated with Proof of Work. According to developers, running a Zilliqa node costs only a fraction of what it would for an Ethereum node.

Additionally, Zilliqa miners can achieve consensus on multiple blocks through a single Proof of Work, resulting in a more consistent payout with reduced variance.

The Zilliqa development team is also exploring the adoption of a Proof of Stake mechanism for their platform's consensus protocol, aiming to offer an environmentally sustainable alternative to Proof of Work.

Pioneering the third generation of cryptocurrencies

Zilliqa is emerging as an exciting addition to the cryptocurrency landscape, delivering impressive transaction speeds on a scalable, secure platform that holds great promise for dApp and smart contract creators.

These advantages, coupled with the Zilliqa team's commitment to ongoing strategic partnerships and network enhancements, suggest a promising future for the platform. If Zilliqa can demonstrate the effectiveness of its scaling solution, it could potentially outshine other cryptocurrencies. One thing is clear: monitoring the progress of this project is highly worthwhile.