What is Zilliqa (ZIL)?
in Zilliqa (ZIL)
Blockchains have a scaling problem. At the end of 2017, the cost to send a single transaction on the Bitcoin network reached as high as $50. Those who didn’t want to pay the high fee had to wait a day or more for the transaction to go through. More recently, the fees on the Ethereum network have exploded due to network congestion from yield farming.
Unlike Bitcoin or Ethereum, Zilliqa is a cryptocurrency that’s been designed to scale right from its launch. The major selling point of Zilliqa is that it can clear more than a thousand transactions per second, thus enabling sophisticated financial instruments to be built on top of it. In this article, we’ll look at how Zilliqa works, who it’s been designed for, and how Zilliqa uses sharding to scale.In this article
Like Ethereum, Zilliqa is a smart contract platform. Smart contracts on Zilliqa are programmed using Scilla, a programming language developed exclusively for Zilliqa. The advantage of Scilla is that it has a unique design that helps developers create smart contracts without vulnerabilities.
Since blockchain programming is such a new field, it’s still common for developers to make mistakes when they’re writing smart contracts. These mistakes have led to millions in losses as hackers discover exploits and drain liquidity from applications. Zilliqa hopes that Scilla will make it easier for programmers to create smart contracts that cannot be exploited.
As mentioned, the single biggest selling point of Zilliqa is that it’s a smart contract platform that is designed to scale. There are a lot of different ideas about how to scale a blockchain, but the solution that Zilliqa has gone with is sharding. Instead of having a single blockchain (what would commonly be called the main chain or base chain), the blockchain is split into multiple parts.
Since smart contracts are built on different shards, usage demands are spread out over the network. Congestion is alleviated and Zilliqa can scale up to thousands of transactions per second. Conveniently, as the network grows, Zilliqa can add more shards to scale to a very high level.
The disadvantage of sharding is that interoperability is hampered. While shards are in communication with each other, that communication is not instantaneous the way it would be if all of the smart contracts were built together on the main chain. For example, if a smart contract on shard 6 needs to interact with a smart contract on shard 17, there could be a delay that slows down communication and execution.
One solution is to have similar applications built on the same shard. For example, all of the smart contracts having to do with supply chain tracking could be built on one shard so that they can interact with each other instantaneously. Another shard could contain insurance applications, and another shard could have all of the DEXes (Decentralized Exchanges).
If you’ve heard of sharding before, you might be familiar with sharding on Ethereum. At some point in the next two years, Ethereum will adopt sharding to scale the network. The plan currently calls for 64 shards, although this could change (the original plan called for 1,000 shards).
To finish off this section, here are two additional pieces of information about sharding on Zilliqa.
- Using just 3 shards, Zilliqa was able to achieve 1,218 transactions per second on their testnet. Historically blockchain networks have had trouble replicating results from testnets in the real world; however, even 600 transactions per second would be a massive improvement over a smart contract protocol like Ethereum.
- Each shard on the Zilliqa network consists of 600 nodes. These nodes are responsible for validating transactions.
The Zilliqa coin, Zilling or ZIL, has been doing pretty well lately in terms of price growth. At one point ZIL rallied by 950% and went all the way up to the number 40 spot on the crypto charts ranked by market cap. As of September 2020, ZIL has fallen back down to the number 67 spot on the charts. However, another big rally could quickly bring it higher again.
According to Messari, ZIL has a max supply of 20,999,982,720 coins, and there is a 6.8% annual inflation. That’s compared to a cryptocurrency like Bitcoin, which has about a 2% annual inflation, or Ethereum, which has an annual inflation rate of about 5% per year.
The ZIL coin is used to transact value in the network and reward the nodes and the miners for securing the network. The Zilliqa team was recently hyped up over the fact that 4 million transactions had taken place on the network. Now that this milestone has been reached, they’re looking forward to reaching 5 million transactions soon.
Zilliqa has raised money from private funding as well as an ICO.
During their private funding round, Zilliqa was able to raise a robust $20 million to support the project’s development. While that was enough money to fund a small team for several years, the 2017 ICO craze was too tempting to pass up. Zilliqa held an ICO from December 27th, 2017, to January 4th, 2018. During that time, they were able to raise an additional $22 million
As with any other cryptocurrency, it’s essential to store Zilliqa somewhere secure. Exodus is a non-custodial Zilliqa wallet, which means that nobody else has access to your coins. As long as you keep your seed phrase, safe nobody will ever be able to take your crypto.
You can also use Exodus to buy ZIL with the built-in exchange feature instantly. You don’t even have to send your coins to an exchange or submit any documents to get KYC approval. With Exodus, you can buy or sell Zilliqa right from your wallet.
The Exodus Zilliqa wallet is available for desktop, Android and iPhone. The Exodus mobile apps have the same functionality as the desktop wallet and are the highest-rated mobile crypto wallets available.
The Future for Zilliqa
Given the congestion on the Ethereum network and the high transaction fees, scalable smart contract platforms like Zilliqa are starting to look more appealing. Developers want to build on a platform that can scale as needed and won’t be affected by other dapps with high volume. For Zilliqa to succeed it will need to attract a whole new generation of users, developers and applications. While that won’t be easy, the more congested platforms like Ethereum become, the more developers will be looking for alternative solutions that they can build on.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.