RV Blog What is Zilliqa Coin (ZIL)?

What is Zilliqa Coin (ZIL)?

Zilliqa Coin (ZIL)

Zilliqa is a high-throughput blockchain that is designed to scale to thousands of transactions per second. The project seeks to solve the issue of scalability that has affected Layer 1 networks such as Bitcoin (BTC) and Ethereum (ETH) by increasing the transactional throughput. The Singaporean blockchain project aims to achieve this by employing sharding as a Layer 2 scaling solution.

Zilliqa was founded in June 2017 by co-founders Amrit Kumar and Xinshu Don. Both were researchers at the National University of Singapore. Nine months later the testnet went live. And in January 2019, the Zilliqa mainnet was finally going live.

Zilliqa is one of several competing blockchains that aims to create an ecosystem of decentralized applications (DApps). In a 2018 position paper, the Zilliqa team announced that the protocol aims to compete with centralized-payment systems such as Visa and Mastercard.

The native utility token of Zilliqa is ZIL and is used to pay for transaction fees and run smart contracts.

How Does Zilliqa Work?

Zilliqa offers several features common to crypto networks such as smart contract capability, token issuance, or transaction settlement. However, Zilliqa is unique in the sense that its transactional capacity far exceeds that of Ethereum.

According to the protocol’s whitepaper, the design allows it to double its transaction processing rate every time a few hundred nodes are added to the network. Currently, the network can process up to 2,500 transactions per second, which is a thousand times more than Ethereum’s transaction rate.

To achieve this high throughput, Zilliqa entirely relies on a sharded network. Sharding is the cornerstone of Zilliqa’s design, dividing its network into smaller consensus groups called shards. These are all equally capable of processing transactions in parallel.

In other words, sharding employs a structural technique that splits the network into numerous pieces, or shards, thereby distributing fractions of the network’s transaction load to constituent nodes.

Each shard acts as its sub-network and is assigned several nodes. These nodes serve to store data, process transactions, and add new ‘microblocks’ to their specific shard chain. Microblocks are merged into transactional blocks DS (Directory Service) nodes and then added to the Zilliqa mainnet. It’s important to know: The shard nodes only contain a fraction of the Zilliqa blockchain and not the entire network history.

An example can illustrate this structure: Let us assume that the Zilliqa protocol has 20,000 nodes. Zilliqa will automatically create 25 shard chains, each containing 800 nodes. All the shard chains then process transactions simultaneously and in parallel. This sharded architecture is suitable for running large-scale computations alongside each other.

Furthermore, Zilliqa comes with its proprietary language, Scilla, to run smart contracts and allow developers to design decentralized applications. Scilla directly leverages the underlying blockchain’s sharding architecture to provide a large-scale and highly efficient computation network.

Zilliqa is secured through a Practical Byzantine Fault Tolerance (pBFT). pBFT acts as a consensus mechanism that keeps all the nodes in sync, ensuring that at least two-thirds of all nodes must agree that a record is accurate for it to be subsequently added to the network.

Each shard chain relies on a network of nodes to confirm a microblock. Once each shard has arrived at a consensus, they are combined into a transaction block and added to the main network. Zilliqa uses elliptic-curve cryptography to secure its consensus mechanism.

In Zilliqa, the pBFT consensus mechanism is combined with a proof-of-work algorithm to generate shards and assign node identities.

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Zilliqa as a Scaling Solution

From the onset, the primary goal of the Zilliqa project was to build a blockchain with smart contract functionality that could operate at scale. This was achieved in part by creating a modified proof-of-work (PoW) consensus mechanism that offers cheaper transactions compared to Bitcoin (BTC) and Ethereum (ETH).

However, what made Zilliqa gain popularity was its decision to implement sharding on its network. This has made it one of the first smart-contract-capable protocols to implement sharding on its mainnet. 

As explained in the previous section, sharding allows for parallel computations to achieve the high throughput of transactions on the Zilliqa network. Parallelization is a speedier and cost-effective solution than unsharded, linear networks, where transactions are processed through one single large chain.

Zilliqa’s sharded network makes it ideal for processing complex computational tasks such as financial modeling, training neural networks, data mining, analytics, and machine learning applications.

Zilliqa’s Tokenonomics

In 2017, Zilliqa released its native ERC-20 token, known as ZIL. The token was made available through the Zilliqa token generation event (TGE) that was terminated in Q1 2018. Subsequently, the tokens were transferred to the Zilliqa mainnet in 2020 as part of a token swap. This way, Zilliqa became its own, independent blockchain with its own native token.

ZIL has a fixed maximum supply of 21 billion coins. According to the Zilliqa whitepaper, the project aims to mine roughly 80 percent of all ZIL in the first four years, and the remainder in the next six years. This means that by 2027 all tokens will be mined, indicating that there is a token hard cap.

As a matter of fact, the block reward will decrease over ten years. The process of token issuance will be smooth as block rewards will not drop drastically after several blocks. This way the network hash rate will remain stable as the reward decreases gradually over time. Therefore, one can argue that these characteristics will ensure ZIL remains deflationary in the long term.

ZIL is used for transactions on the Zilliqa mainnet as well as a means to incentivize miners with block rewards. Additionally, there’s gZIL, which is the protocol’s governance token. It allows users to actively propose changes or improvements to the protocol. gZIL has a fixed supply of 722,000 coins and can only be earned by staking your ZIL tokens.

Read the Full GuideHow to Buy, Mine, and Stake Zilliqa

What is Metapolis?

Zilliqa recently launched Metapolis, a metaverse as a service (MaaS) platform that enables users to build their virtual universes as they desire. Metapolis will provide the required technology and infrastructure to allow users to build and maintain their metaverses. The protocol will make it easy for small entities to access the virtual world space by significantly reducing the high-cost barrier that plagues traditional metaverse services.

In December 2021, a blog post by the Zilliqa team stated that the Metapolis, “whose suffix means ‘city’ in Greek, is designed as a cutting-edge extended reality (XR metaverse) — an amalgamation of AR and VR — and is powered by Zilliqa’s scalable and secure blockchain platform.”

Metapolis has gained attention due to its hyper-realistic graphics and ability to connect with users through gamification, e-commerce, and NFTs. With partners like Agora (a photo-sharing app), Zilliqa is looking to entice many brands to Metapolis to allow for a more enriching user experience.

Sandra Helou, head of metaverse and NFTs at Zilliqa, states: “We are excited for this partnership as we can bring not only creativity to life within the metaverse but also open borderless access for creatives worldwide to connect in the digital world. The partnership between Agora, Zilliqa, and Metapolis means we are at the forefront of Web3 innovation.”