What is Zilliqa? How does it work and why is it important? Table of Contents
Introduction to Zilliqa
One of the major challenges facing cryptocurrencies and the blockchains they use today is scalability. Unlike Bitcoin or Ethereum, which represent blockchain networks, Zilliqa (ZIL) was built from the ground up to solve this problem. Zilliqa Coin’s primary focus is its ability to process thousands of transactions per second and build financial instruments on top of it. The network can be used to integrate various blockchain-based services such as data-driven DApps (DApps) and smart contracts.
If you want to know more about Zilliqa and where your opportunities to invest in Zilliqa are, you have clicked on the right link. In this post, we take a deep dive into what Zilliqa is, how it came into existence in the blockchain world, and whether it is a worthy investment for you this year.
What is Zilliqa?
Zilliqa aims to solve the scalability problem of other blockchains with a network of smart contracts on shards. Zilliqa’s research team noticed a potential problem when the network could process 10 to 20 transactions per second and saw it as an opportunity. Zilliqa improves the total performance and capacity of the network by allowing concurrent chains to process transactions in parallel through a shard structure.
In addition to extensibility, Zilliqa provides a smart contract layer that allows users to create smart contracts using the company’s native programming language, Scilla. Additionally, the network uses a hybrid proof-of-work BFT mechanism to achieve consensus on contract execution and settlement. We will go into more detail about the consensus protocol later in this post.
Zilliqa started the staking scheme with the hope of “increasing the distribution of node operators”. It is also a shared blockchain network where developers can create smart contracts and dApps.
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History of Zilliqa
Zilliqa is a Singapore-based project that started as a blockchain thesis project at the National University of Singapore. In 2016, Prateek Saxena and Loi Luu wrote a white paper highlighting the idea of blockchain sharding.
After the publication of the white paper, Saxena founded Anquan Capital, and Roy Lu founded Kyber Network. Soon after, Xinshu Dong was hired as the engineering team leader at Anchuen Capital, and the company agreed to start the Zilliqa project.
In June 2017, Zilliqa started. Amrit Kumar, Chief Scientific Officer of the Project, Yaoqi Jia, Chief Technology Officer of the Project, Shinshu Dong, Former Chief Executive of the Project, and Max Kantelia, Advisor and Director ) was co-founded. These are computer scientists, researchers, and engineers with PhDs. Zilliqa started like that.
At the end of 2017, in an undisclosed fundraising round, Zilliqa raised the equivalent of $12 million in ETH. Since the price of ETH has risen since the private round, the initial private investment has risen to the value of the project’s hard cap (maximum hard cap) of $20 million.
In May 2018, the Silla smart contract programming language was released. In November of that year, the testnet went live, and the project invited miners and developers to test the network. Zilliqa then launched smart contract functions and transactions in 2019.
How does Zilliqa work?
In a well-established blockchain such as Bitcoin or Ethereum, miners try to solve the same set of transactions in one block. This happens in a logical and sequential order. On the other hand, sharding divides the blockchain network into “shards” and resolves transactions by synchronizing some blocks with other blocks.
The best way to explain this is to think of dividing a team into smaller groups to accomplish a large task. In other words, not everyone tries to accomplish the task at once, but each group completes a different part to get the task done.
This analogy shows that sharding makes transaction processing much faster and more efficient. The better the network can handle transmissions, the more nodes are joined to the network. Imagine getting more subgroups to help you solve the puzzle.
Zilliqa held an Initial Coin Offering (ICO) in January 2018 and raised $22 million. Zilliqa, like other cryptocurrencies, has tokens. This token is called ZIL. Similar to other DApp networks such as Ethereum, ZIL Coin functions as mining compensation, gas for contract execution, and bidding for payment of transaction fees.
The gas fee on the Ethereum network fluctuates depending on how crowded Ethereum is ( we hope Ethereum 2.0 will solve this problem). On the other hand, Zilliqa can process transactions at a much faster rate, resulting in relatively low fees. Additionally, ZIL is paid to miners and used to verify Zilliqa blockchain transactions.
A network consensus protocol is a mechanism for reaching compromises between users. For a transaction to take place, the Bitcoin consensus protocol requires the consent of at least half of the nodes. To reach consensus, the Zilliqa blockchain uses two levels of consensus protocol. Because it has multiple layers, it is called a hybrid framework.
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The tiers are:
(1) Shard layer
Sharding acts as a preparatory layer to form the entire block. A shard only handles micromodules, which are small pieces of a larger block. Nodes in the shard hierarchy only need access to a limited amount of data and do not need to connect to other shards. Then these micromodules go to the DS layer.
(2) DS layer
The DS committee is made up of a small number of randomly selected nodes. Those nodes are then joined together into macroblocks to form a single block and decide whether it is true or not. These nodes have direct access to the blockchain, allowing them to make final decisions on individual blocks.
For concurrent transaction processing, Zilliqa uses shards. For consensus on legitimate transactions, each shard and DS committee use optimized Byzantine Fault Tolerance (pBFT). Blocks in Byzantine fault tolerance have deterministic finality. In other words, it is different from the Nakamoto consensus, which has stochastic finality in Bitcoin. Therefore, multi-block validation is not required.
What is sharding?
In a nutshell, sharding is a database partitioning method commonly used by blockchain networks to achieve scalability. A shard checks “mircroblocks” in parallel with other shards. The microblocks are then merged to form new blocks on the blockchain. This is done to improve the transaction processing power of the blockchain network and increase the overall efficiency.
The main benefit of sharding is that the blockchain only needs to store and process transaction data across nodes in a single shard. Otherwise, the data would have to go through every node in the network, and as a result, the network would continue to slow down whenever a new user appears. Sharding solves this problem by dividing one chain into multiple parallel chains.
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What is Zilliqa used for?
The cryptocurrency world has been waiting to see how the Zilliqa Network will deliver the services it has promised since its initial coin launch in 2018. So, who can benefit the most from Zilliqa? Rica will be the first block in the main chain, enabling sharding four (mainnet) is. It is this sharding that has provided Zilliqa with scalability with fast transaction times and low fees.
It is these characteristics that make Zilliqa attractive to a growing number of dApp and smart contract developers (who can create smart contracts using Silla) amid the DeFi boom. In addition, users can stake ZIL on the blockchain for profit, which can also be used as a fee for transactions made on the network.
As the Zilliqa ICO did, the platform showed many possibilities. The fast transaction speed has succeeded in attracting the attention of many in the cryptocurrency community, and Zilliqa seems to be finally gaining some traction.
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Market Price Movement of Zilliqa
Zilliqa has shown relatively steady growth since its inception. There was no sharp price drop. About three years ago, in May 2018, the Zilliqa price hit an all-time high of $0.23. Six months later, in December 2018, the price of Zilliqa fell to $0.01. The ZIL remained in the range of $0.004 to $0.02 for about two years, then climbed to $0.07 as the December 2020 bull market began. At the time of writing this post, the price of Zilliqa is about $0.20 with a market cap of $2.25 billion.
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What is the future of Zilliqa?
Considering the congestion and high transaction costs of the Ethereum network, flexible smart contract platforms like Zilliqa become more attractive. Developers want a network that can scale as needed and is not affected by the speed of large dApps. However, for Zilliqa to thrive, it must stay within the purview of customers, developers, and apps. As such, Zilliqa has not yet fully exploited its potential.
However, there are numerous projects on the network that will help you achieve this goal. In April 2021, Zilliqa announced the NFT Collector Package featuring world-renowned boxer Terence Crawford to capitalize on the non-fungible token ( NFT ) boom. Bidding prices started at $250,000.
One of Zilliqa’s greatest strengths is that there are currently no competitors that do exactly what Zilliqa does. This means that other market participants can access the cryptocurrency market and continue to evolve without fear of getting in the way.
What to expect from Zilliqa’s future?
Cryptocurrencies are highly volatile. Therefore, it is not easy to accurately predict what the fluctuations in cryptocurrency prices will be in the future. Let’s take a look at what some well-known analysts predict for Zilliqa price.
Wallet Investor predicts that the price of ZIL could rise to around $1.03 by 2025. Coinskid predicts that ZIL will reach $1.53 by the end of 2025, and by then, ZIL adoption will grow exponentially.
Coinpedia expects ZIL to enter a larger bullish trajectory. The ZIL price is projected to reach $1 by the end of 2021 and $4.50 by 2025 with certain developments and software upgrades.
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Price factor of Zilliqa
The prospects for Zilliqa look good, especially given the project’s fundamentals. Zilliqa has shown explosive community expansion, abundant liquidity, and technological advancement. So there could be a big global acceptance soon. There have been no major setbacks yet (conceptual flaws in the design, team conflicts or divisions, code flaws, and abuse, etc.)
Since cryptocurrencies are not controlled by central authorities such as banks or governments, they are not affected by monetary policy, inflation, or economic development like traditional fiat currencies. However, there are other factors that could trigger Zilliqa price movements.
For example, the supply and demand for a particular cryptocurrency significantly affect its price. It is important to keep in mind not only the number of buyers but also the number of places where the coins can be used. Most traders are reluctant to sign up for more than one exchange platform, so you need to keep in mind the number of exchanges as well as the liquidity of being able to trade Zilliqa on these exchanges.
As cryptocurrencies develop and improve over time, they can attract more users, which in turn can significantly increase the coin price. Finally, regulations and laws regulating how coins are operated, exchanged, and distributed are factors that can raise or lower the ZIL price at any time.
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Conclusion
Our conclusion is that Zilliqa is an overall safe investment. Zilliqa is using sharding that can solve one of the biggest problems with blockchain technology, and there are few strong competitors to this Zilliqa right now. The founders of Zilliqa are all PhD-level computer scientists with a thorough understanding of blockchain technology. We see Zilliqa as a small-cap, high-growth startup with growth potential.
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April 24, 2024
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