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What Is Zilliqa (ZIL)? A Crypto Coin Study

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Zilliqa is a scalable blockchain with a strong focus on efficiency, using sharding to reduce the network energy requirements drastically. One of the first public blockchains to implement sharding, Zilliqa is an interesting blockchain network.

Zilliqa aims to solve one of cryptocurrency and blockchain’s fundamental issues: increasing transaction processing while maintaining security and decentralization. Here’s how Zilliqa works and whether it lives up to the billing.

What Is Zilliqa?

Zilliqa is a public blockchain designed from the ground-up for transaction scaling. One of the biggest issues facing cryptocurrencies like Bitcoin and Ethereum is that network scaling to increasing transaction throughput is difficult.

“Zilliqa is a redesign from scratch and has been under research and development for over two years. The cornerstone in Zilliqa’s design is the idea of sharding—dividing the mining network into smaller consensus groups called shards each capable of processing transactions in parallel.”

The Zilliqa whitepaper [PDF], released in 2017, made several bold claims regarding its potential for scaling and transaction throughput. When published, the Zilliqa team claimed that “At Ethereum’s present capacity, Zilliqa would expect to process about a thousand times the transaction rates of Ethereum.” The Zilliqa testnet went on to do exactly that, racking up a sizzling 2,828 transactions per second over 3,000 nodes—faster than many of its fast blockchain competitors.

The Zilliqa mainnet went live in January 2019, instituting a token swap from existing ERC-20 ZIL tokens, to native ZIL tokens.

The Zilliqa mainnet supports DApps. Developers can write Zilliqa DApps using Scilla, an intermediate-level programming language. Zilliqa’s developers created Scilla to enable human-readable smart contracts while retaining the complexity many smart contracts require. Also, Scilla’s structure eliminates several known vulnerabilities found in other smart contract programming languages.

What Is Zilliqa’s Sharding?

The Zilliqa blockchain uses several core technological concepts to give it the edge over competitors. Sharding is the “secret sauce” that makes the Zilliqa blockchain more scalable than most other public blockchains. So, what is sharding?

Sharding breaks the Zilliqa network into smaller chunks. For example, say the Zilliqa network has 1,000 active nodes. Zilliqa automatically divides those 1,000 nodes into ten smaller shards comprising 100 nodes each. Nodes in each shard can process transactions in parallel. If each shard processes ten transactions per second, then the combined shard output is 100 transactions per second.

Dividing the Zilliqa network into shards allows linear scaling, allowing the network and transaction throughput to continue growth.

How Does Zilliqa Implement Sharding?

The idea of sharding isn’t new or unique. Sharding is a common database load management technique, for instance. However, the implementation and problem solving of Zilliqa sharding are what sets it apart.

  1. Sybil Resistance. A public blockchain can come under attack from malicious nodes. An attacker may attempt to span multiple nodes to influence the network majority decision-making process. This is known as a Sybil attack. Zilliqa negates potential Sybil attacks using a Proof of Work check for new network nodes. Existing nodes check the PoW of the new node, confirming its work and intention before it connects to the wider network.
  2. Shard Creation. Dividing a network into shards is a great idea, but how does Zilliqa decide which nodes to combine into a block? The Proof of Work check also decides which nodes should work in parallel. The Zilliqa network elects a dedicated set of nodes, known as the directory service committee (DSC). At regular intervals, one DSC node is pushed from the group, and a new member enters (to stop network domination). Each time a new DSC member joins the committee, each network node performs a new PoW check. Depending on the speed of the PoW check, the submission itself, “and some randomness,” each node is assigned to a shard.
  3. Shard Size. How, then, does Zilliqa manage the number of nodes per shard? Is there a maximum or a minimum number of nodes? The shard size relates to network security. If the shard size is too small, malicious nodes stand a greater chance of manipulating the network. Therefore, Zilliqa considers 600 nodes the minimum shard size.

A shard can still contain malicious nodes. But the minimum shard size of 600 nodes should counteract the actions of a minority.

The above relates to Zilliqa network sharding. The Zilliqa development team also have plans to implement the vastly more complicated sharding of its virtual machine, but at a much later date.

PoW, PBFT, and Mining Zilliqa

Zilliqa uses a Proof of Work algorithm to confirm the network status and assign new nodes. (What is a Proof of Work algorithm, anway?) However, it isn’t a Proof of Work blockchain. Instead, Zilliqa uses a Practical Byzantine Fault Tolerance (PBFT) consensus mechanism that keeps network energy consumption low. The PBFT mechanism is active within each shard, drastically decreasing the time taken to verify the network.

Only using PoW for network node confirmation means Zilliqa mining is also a relatively low energy enterprise, especially in comparison with the other major public blockchains. Because the network requires a small amount of verification via mining, only around 12 hours PoW mining is required per month. The mining figure could rise as the network scales but would remain orders of magnitudes smaller than similar PoW-based networks.

Where Can You Buy Zilliqa?

ZIL is the token of the Zilliqa network. There is a total of 21 billion ZIL. 6.3 billion ZIL were distributed during Zilliqa’s initial token generation event, with a further 6.3 billion ZIL distributed to ZIL investors, including ICO investors. The remaining 8.4 billion ZIL reserved for mining rewards and other network payments.

At the time of writing, one ZIL is worth $0.006604—fractions of cent, and a long way down from Zilliqa’s all-time high of $0.02 per token. At the time of writing, ZIL has a market capitalization of over $57 million, ranking it the 77th largest cryptocurrency by market cap. Coincodex lists Zilliqa for sale on 37 exchanges, with 75 coin pairs.

Want to buy some ZIL? Create a new Binance Account using our link and help keep Blocks Decoded exploring cryptocurrency one block at a time.

Disclaimer: This is not investment advice. Bitcoin and other cryptocurrencies are highly speculative. Nothing is guaranteed in cryptocurrency. Always perform your own research before investing and never commit more money than you are comfortable losing.

What Is Zilliqa’s Future Potential?

Zilliqa holds a significant amount of future potential. As a blockchain with rapid transaction processing and well-thought-out blockchain scaling, Zilliqa could well become one of the largest public blockchains.

However, adoption is key, and adoption is what Zilliqa lacks. At the time of writing, there are only 20 or so active DApps on the Zilliqa blockchain. That figure compared to Ethereum, EOS, TRON, or otherwise, is extremely small. In fairness, the Zilliqa mainnet is much younger than those alternatives, so detractors should give Zilliqa time to grow before writing it off. I would also add that Zilliqa is a genuinely innovative project within the blockchain sphere, especially in comparison to its close competitors.

The future is bright for Zilliqa. Future updates will introduce privacy features via zkSNARKs, enable interaction with high-level programming languages, support for more cryptocurrency wallets, more services, and important blockchain partnerships.

Join the Zilliqa Community

If you want to know more about Zilliqa, or simply want to stay informed of updates and developments, you can join the passionate Zilliqa community.

If you would like to read more Blocks Decoded Coin Studies, we have also written about WavesNEMBinance CoinStellar, and more.

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