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What is Zilliqa (ZIL)? The Sharding Blockchain Explained

While blockchain is a game-changing innovation, it is still far from perfect. The main dilemma that many blockchain developers face is the fact that decentralisation.

Posted June 22, 2021

Illustration of a man holding the Zilliqa logo.
Illustration of a man holding the Zilliqa logo.

While blockchain is a game-changing innovation, it is still far from perfect. The main dilemma that many blockchain developers face is the fact that decentralisation often comes at the cost of scalability — the more secure the network, the slower it gets.

What is Zilliqa (ZIL)?

Zilliqa is the network that attempts to solve this dilemma by simply becoming the first to adopt blockchain sharding to improve transaction throughput without sacrificing the security offered by decentralisation.

Founded by a group of academics at the National University of Singapore (NUS) in 2017, Zilliqa raised US $22 million worth of Ether through an initial coin offering, which pre-sells the zillings (ZIL) tokens to early investors. The project received a lot of attention as it is backed by rigorous peer-reviewed research.

The total supply of ZIL is capped at 22 billion zillings. ZIL was first issued as an ERC-20 before a token swap event offered to convert the Ethereum-based ZIL tokens into the native cryptocurrency that we know today.

Ziliqa claimed to be able to process more than 2,800 transactions per second on its testnet, and now having launched the mainnet in January 2019, a world of scalable blockchain is open without limits.

Zilliqa technology explained what is blockchain sharding?

Zilliqa logo on a smooth blue and gray gradient backgroun.
How are the foundations for Zilliqa? Source: Cryptonomist.

Blockchain sharding is the process of dividing the network of computer nodes into several groups, called shards. Each shard can process transactions in parallel with one another. Sharding is one of the best scalability solutions for blockchains, but why exactly?

In order to fully explain blockchain sharding, you’ll need to know about how traditional blockchains work.

In a traditional blockchain (based on Bitcoin), every miner or validator in the network receives transaction requests from users around the world. Sometimes, some requests are sent simultaneously, while other requests that were sent earlier would reach the last validator last (due to inter-node latency).

After validating, each node will propose a block by enlisting the known transaction requests into the candidate block. Due to inter-node latency, transaction requests aren’t necessarily ordered chronologically, nor will all the nodes propose the same content for the next block.

In order to reach a consensus on what the next block should look like, an algorithm is used to randomly select a node as a ‘leader’ or ‘block creator’ that will determine the official content of the next block. 

In this model, regardless of the number of nodes, blocks are created one at a time. This could be problematic, say for Bitcoin when its transaction speed is about 4 – 7 seconds. Bitcoin, Ethereum, and many blockchains that were built with the same model, are suffering from scalability problems.

Learn more: Bitcoin security with Proof of Work explained.

How Zilliqa improves scalability with sharding

Adding the number of nodes in a blockchain network only adds security, but not speed. In fact, due to inter-node latency, adding more nodes can logarithmically reduce scalability. It seems counter-intuitive, but the evidence is apparent. Even with Bitcoin’s 11,000 mining nodes, network fees remain at the high levels previously unseen in the network.

As mentioned before, sharding is the practice of dividing the network into groups of computer nodes into shards that process and validate transaction requests in parallel.

Sharding is not a new concept, as it has long been implemented in data science. However, the existing model for data sharding has only been applicable in centralised data centers.

In a sharded blockchain network, nodes are randomly assigned to a shard. Each shard acts like a parallel chain that processes a set of transaction requests that do not exist in other shards. Each shard then will create a “micro-block” after each computer in the shard comes to a consensus.

Now, we have micro-blocks that exist in isolation. What Zilliqa does next is to assign a group of computer nodes in order to merge all the micro-blocks into the main Zilliqa blockchain.

In this way, future smart contracts and transaction requests can refer back to the history of the main blockchain for easier and faster verification. 

The most important takeaway is that through sharding, adding more nodes will increase the speed of the Zilliqa network linearly

Zilliqa smart contract language explained What is Scilla?

The team behind Zilliqa had also developed a new smart contract programming language called Scilla. This language is dubbed “safe by design”, reflecting on the smart contract hack on an Ethereum DAO, causing a major hard fork and splitting of the network to take place.

Scilla stands for Smart Contract Intermediate-Level Language. This type of language promises to make auditing easier, making the code less prone to bugs. Applications that use Scilla could be less vulnerable to attacks by “eliminating certain known vulnerabilities directly at the language-level”.

Scilla was also peer-reviewed and accepted at the Object-Oriented Programming, Systems, Languages & Applications (OOPSLA) Conference in August 2019, a prestigious conference held by the world-renowned Association for Computer Machinery.

Curious about smart contracts? What are Smart Contracts? – A Complete Beginner’s Guide.

What is the future of Zilliqa?

Providing an example for Ethereum 

When it comes to using sharding as a solution for blockchain scalability, Zilliqa clearly has the first mover advantage. It is exponentially easier to adopt this method of scalability if a blockchain such as Zilliqa were to be built using this protocol from scratch.

Ethereum as the biggest platform on which hundreds of decentralised applications (DApp) are live, have been using the traditional blockchain model and cannot simply switch to sharding solutions in a snap. At the time of writing, Ethereum 2.0 developers are implementing sharding on the test network. 

Zilliqa, being ahead of the curve in this regard, has a lot to show what the developers of Ethereum 2.0 will expect from this scalability solution. Ethereum co-founder Vitalik Buterin even praised Zilliqa, saying that “it has a lot of room to succeed and prosper”.

Staking on Zilliqa for governance

Zilliqa uses a practical Byzantine Fault Tolerance (pBFT) consensus mechanism, which is different from Ethereum’s proof of work and Cardano’s proof of stake as their consensus algorithms. However, Zilliqa uses both algorithms for other means.

Proof of work is used by the network to authorise a new node into the network, which greatly increases the network security against Sybil Attacks. In the later update, Zilliqa uses proof of stake for decentralised governance.

For this, Zilliqa will introduce the gZIL token (‘g’ stands for governance), which is distinct from ZIL used as the cryptocurrency for paying fees on the network. Staking ZIL will earn gZIL tokens, which signifies that a long-term holder of ZIL has greater rights to vote on Zilliqa Improvement Proposals.

According to the official web page on ZIL staking, “For every 1,000 $ZIL earned as staking reward, 1 gZIL will be issued (i.e. 0.001 gZIL will be issued for every 1 $ZIL staking reward).” 

Learn more: What is Proof of Stake and How Does it Work?

Other on-chain updates

At the time of writing (June 2021), Zilliqa developers have committed a few additional features into the core infrastructure, such as adding zk-SNARKS for greater privacy, making the Ziliqa blockchain more interoperable with other blockchains, and implementing a Layer 2 chain for improved data storage, especially for the use in smart contract applications.

Zilliqa’s smart contract language Scilla is also benefiting from some improvements, such as a more efficient backend interface to make the language more developer-friendly, and to add a verification process to simplify auditing of code written in Scilla.

Can we trust the team behind Zilliqa?

What makes Zilliqa fundamentally strong is the foundation. The project was founded by a team with a high degree of accountability as well as expertise

The Zilliqa project was co-founded by Amrit Kumar (President and Chief Scientific Officer), Xinshu Dong, now a former project Chief Executive Officer, and Prateek Saxena (Chief Scientific Advisor), who is also a research professor of computer science at NUS. 

Yaoqi Jia, has also worked on Zilliqa as the Chief Technology Officer and is now one of the leaders of Parity (a software company that supports the Polkadot blockchain network). 

Rooting on academic research, the co-founders have a strong conviction that scalability is one area that needs the greatest attention.

Blockchain technology is no longer a niche computer science project, but a real and highly impactful innovation that must be developed with the same discipline as any other world-changing creations.

How to Buy Zilliqa (ZIL)?

With that said, Zilliqa has the potential to become one of the top blockchain developing blockchain networks in the crypto space – and definitely something to consider adding to your crypto portfolio.

You can support Zilliqa by becoming a network node to secure and speed up the network even more. However, that is not such an easy task.

Fortunately, simply holding ZIL in your crypto wallet is enough to get you started. Being a popular cryptocurrency, even world-renowned hardware wallet Ledger supports ZIL, making it easier than ever to securely store your investment in Zilliqa projects.

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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.

Last updated October 7, 2022

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