Zilliqa

Current Price $0.01 USD
Market Cap $114.22 Million
Volume (24 hr) $4.65 Million
Change
1 Hour
+0.16%
24 Hours
+5.83%
7 Days
-9.63%
Exchange
Currencies
Fees
Fiat?
88
0.5%
247
0.1%

Zilliqa is a high-throughput distributed ledger platform. Investors and cryptocurrency enthusiasts are drawn to Zilliqa because it was designed to scale and will eventually be able to handle hundreds of thousands of transactions per second. It uses sharding technology to linearly increase transaction rates as the network expands.

Scalability is a pressing issue for blockchain platforms. Right now, Bitcoin can’t efficiently process all the transactions on its ledger and as a result, transaction fees have skyrocketed. Ethereum faces a similar problem as its limited throughput causes smart contracts to become resource intensive. This became evident when the popularity of CryptoKitties slowed down trading on the Ethereum network.

More Transactions with Sharding Protocol

Zilliqa’s core feature is sharding; a protocol that divides network nodes into several subgroups capable of processing transactions in parallel. With enough network nodes, Zilliqa could theoretically process thousands of transactions per second. For perspective, VISA was capable of processing around 56,000 transactions per second in 2017.

Native Token and Smart Contracts

Zilliqa features a native token called Zillings (ZIL), which is used to power smart contracts, tender the payment of transaction fees, and reward miners for their work. ZIL is currently an ERC-20 token based on the Ethereum network, but this will change once Zilliqa’s mainnet is launched.

Zilliqa also has smart contract functionality, even though running smart contracts on a network that uses sharding is a technical challenge. Smart contracts often rely on checking other states, functions, and variables, and that requires a lot of communication between shards. The required processing power and bandwidth for such processes would nullify the benefits of sharding.

To get around the problem, Zilliqa’s contracts focus on functional programming and don’t allow for checking, changing, or storing states. There currently isn’t a state sharding scheme that solves the problem, but Ethereum is reportedly working on a solution.

Zilliqa Value, Market Cap and Volume

The Zilliqa project raised the equivalent of $12 million USD in ETH during a token generation event (TGE) held in final quarter of 2017. The surge of ETH’s price during that time increased the value of the funds raised to the equivalent of $20 million USD, which was the project’s hard cap.

ZIL has a maximum supply of 21 billion tokens, of which 12.6 billion (60%) were generated at the TGE, and the remaining 8.4 billion (40%) will be released as mining rewards over the next decade. 30% (6.3 billion) of the tokens generated during the TGE were distributed to early contributors, a new research and development entity called Zilliqa Research, the founding team, and various advisors and agencies.

Zilliqa’s market cap went from $22 million USD at the TGE to over $500 million USD at the beginning of February 2018. It is too early to tell whether it will manage to maintain its value in the long-term, but the price of ZIL should go up once the mainnet goes live.

How Zilliqa Works

Zilliqa uses a hybrid consensus protocol that increases its throughput every time 800 new nodes join the network. It dynamically splits the mining nodes into subgroups called shards, and each shard processes a fraction of the network’s transactions.

For instance, if there are 8 shards (6,400 nodes), each one would handle approximately 1/8 of the platform’s transactions. The network is able to keep resource demands stable as long as it has enough shards to divide the consensus load.

Tests performed on a private testnet showed that Zilliqa can process 1,218 transactions per second with 1,800 operational nodes. When the nodes were increased to 3,600, the network scaled to 2,488 transactions per second. In comparison, Bitcoin and Ethereum can currently only process between 3 to 15 transactions per second, despite having 11,600 and 24,000 nodes respectively.

How Shards and Nodes are Managed

Nodes are selected to manage shards by a directory service committee. When a new transaction request arrives, the committee assigns it to a shard for processing. Every shard handles its transactions in parallel with other shards, then all the transactions are merged at the end of a processing period known as an epoch. After every epoch, the committee assembles, validates, and verifies the transactions processed by the shards to create a full block.

Zilliqa does not use a proof-of-work (PoW) mechanism for consensus, but it requires miners to first complete a PoW puzzle that requires just enough computing power to guarantee that one machine is operating only one node. This helps the network establish identity and makes it harder for malicious users to create several identities and overwhelm the network.

Once a node’s identity is proven, it is assigned a shard. Within the shard, the network uses an optimized practical Byzantine Fault Tolerance (pBFT) mechanism, which gives finality to transactions. Zilliqa’s version of pBFT ensures all resulting blocks are definitive without requiring multiple confirmations. Because of finality provided by the mechanism, the network’s entire transaction history does not have to be saved on the ledger. It is enough to store only the latest state.

Zilliqa vs. Other Cryptocurrencies

There have been many proposals for scaling transactions on existing blockchain protocols, such as off-chain computation (e.g. lightning network), creating blockchain hierarchies (e.g. side-chains), and re-parameterizing the original protocol (e.g. adjusting block sizes). None of these solutions can directly make the blockchain protocol itself scalable, and that’s what makes Zilliqa stand out. It is designed with an intrinsic scalability goal throughout its different layers and can scale to efficiently handle more transactions than any existing blockchain. There are many facets of Zilliqa that make it unique from other cryptocurrencies:

Network sharding – Zilliqa’s transaction rate increases as the network expands because of sharding. With 10,000 sharding nodes, the network should be able to match the average transaction rate of VISA or MasterCard with significantly lower fees.

Secure and efficient consensus algorithm – Zilliqa’s hybrid consensus algorithm uses a PoW puzzle to elect and update the directory service committee, which coordinates the sharding process and validates the block of transactions proposed by each shard.

PoW is not used to achieve consensus – The high energy cost associated with PoW systems does not apply to Zilliqa. The cost of running a Zilliqa node is estimated to be about 1/10 of the cost of running an Ethereum node.

Profitable mining – Since mining nodes can reach consensus on several blocks during the parallel processing period, miners are guaranteed more consistent rewards with low variance.

Smart contract functionality – Zilliqa features a smart contract platform that allows users to compute programs in parallel with shards.

New smart contract language – The developers have created a new programming language called Scilla to standardize functional programming on the network. It separates state and function, and distinguishes the communication and computational aspects of smart contracts to make them sharding-friendly.

Buying, Storing and Selling Zilliqa

Since ZIL is not as well established as some other big-name, high market cap cryptocurrencies, it is only available on a few select exchanges. Currently ZIL can be traded on Huobi, Gate.io, IDEX, and EtherDelta.

ZIL is an ERC20 token, which means it can be stored in any Ethereum wallet that supports that token standard. Some popular ERC20 compliant wallets include MyEtherWallet, Mist, Jaxx, and Metamask.

Liquidity of Zilliqa

The scaling improvements Zilliqa promises to bring to public blockchains has generated a lot of buzz in the crypto community which has helped ZIL maintain good market liquidity. Speculators believe its market cap could easily reach $1 billion USD once Zilliqa’s mainnet goes live during the second quarter of 2018, but it is impossible to predict how ZIL will do in the long-term. If it is able to truly scale with global adoption and become the blockchain of choice for hosting high throughput dApps, then the sky is the limit.