SUMMARY

Zilliqa (ticker: ZIL) is a smart contract enable blockchain platform with scalability in mind. It is the first blockchain designed to implement sharding. Sharding allows the chain to increase the amount of possible transactions per second without compromising consensus between nodes and network security by dividing the network into smaller portions or ‘shards’. Zilliqa aims to create a decentralized and open blockchain that leverages the network scalability afforded via their sharding technology to facilitate the usage of smart contracts via decentralized applications and swift payment processing.

Team

The Zilliqa leadership has a heavy background in computer science and engineering, while the advisory board is predominately financiers. The CEO Xinshu Dong has a heavy background in cybersecurity, serving as technical lead for several Singaporean National projects. Chief Scientific Advisor, Prateek Sazena  has had his academic work featured in various blockchain projects such as  Dexecure, TrueBit, Smart Pool, and Kyber Network [3][6].

The Advisory Board has extensive experience in financial services and FinTech companies with prior management positions at places such as Bank of America, and Merrill Lynch [7][8]. Zilliqa in total has around 59 employees [10].

Sentiment analysis

  • Open source: Yes

  • Github Repositories: 5

  • Github commits: 8,460

  • Telegram: 25,995 users

  • Twitter: 56.2k followers

  • Reddit: 10k subscribers

  • Blog: High Activity

(Note: High activity = 1+ post/week, Medium activity = 2-3 posts/month, low activity = less than 2 posts per month.)

Utility and Incentives

Zilliqa’s native cryptocurrency is ZIL, which serves as the mining incentive, contract gas, and transaction fee for its ecosystem. ZIL is required to interact with the blockchain. As development on the Zilliqa platform grows so will the utility of the ZIL token.  Unlike most blockchains with a PoW mechanism, Zilliqa does not use PoW to achieve consensus. Instead, Zilliqa runs on a hybrid consensus algorithm combining Proof of Work(PoW) and “Practical” Byzantine Fault Tolerance(pBFT) mechanics [1]. Unlike traditional PoW algorithms, in Zilliqa, PoW will only be used for a brief period to establish miner/node identity and authenticity and will not be a direct part of the consensus mechanism. This allows the network to utilize the network securing effects of a Proof-of-Work blockchain while limiting the costs normally associated with conventional mining. Normally, BFT consensus mechanisms do not allow large scale transaction output to be achieved. However, by using pBFT as the base for their conesus protocol and applying some adaptations they are able to mitigate the normal limitations of the consensus mechanism while still leveraging its security benefits. Within the Zilliqa network, each shard or smaller portion of the network, runs parallel to the rest of the network. A miner is assigned to a shard by a set of miners called DS nodes [1].  Furthermore, each of these shards and DS nodes has a leader. If the selected node operates as intended then the nodes within the conesus group can reach consensus on sets of transactions as they come in allowing transactions to be confirmed. In the case of a malicious leader node then the honest nodes within the network will start to drop transactions and slow the overall network down. In order to prevent malicious nodes from being detrimental to the network Zilliqa changes the leaders of each shard periodically [1]. As a result attacking the network becomes much more difficult. As each lead node is changed the difficulty of compromising majority of the lead nodes increases and reduces attack vectors.

The design mechanisms of the Zilliqa blockchain allow it to be scalable, and secure while providing an incentive for securing the network. Currently, early testnet benchmarks allow the network to process around 2,488 transactions per second(tps) [13]. As more nodes are added to the network, Zilliqa’s transactions per second should continue to increase in a linear fashion.

Zilliqa uses their native smart contract programming language Scilla to leverage the underlying scalable architecture to create smart contract applications that run efficiently on the blockchain.

As the Zilliqa network grows in size, transaction throughput, and application development the access to the utility the ZIL token provides also increases.

Tokenomics

Token allocations were 30% total to public and private sale, 40% to mining rewards, and 30% company, team, agencies [14].

Zilliqa raised a total of 48,889ETH through an ICO that began 12-27-17 and ended 01-04-2018, creating a total of 21 billion ZIL.  6.3 billion were distributed in the public sale, and an additional 6.3 billion were allocated between: investors, Zilliqa Research, the founding team, and various other supporting organizations. The remaining 8.4 billion ZIL will be released over a 10 year period through Proof-of-Work rewards [14].

ZIL is listed on a wide range of crypto-exchanges, including both Binance and Coinbase. The coin does seem to be very diversified in ownership with 40,103 wallet holders [15].

Market Opportunity

As an overarching blockchain platform, Zilliqa has a wide range of markets it aims to disrupt. Zilliqa’s main focuses are in digital advertising, gaming, and remittance currently. It’s competitors would be other native blockchain platforms such as  Ethereum, EOS, and TRON. Zilliqa’s marketcap is $135M marketcap in comparison Ethereum’s is $13.4B, EOS’s is $2.98B, and TRON’s is $1.5B [16]. Currently, none of the above blockchain platforms have the reported transaction speed that Zilliqa does. However, Zilliqa requires the development that the previous platforms have if it wants to  exceed their marketcap. The scalability problem has been a longstanding issue for blockchain platforms with a real solution yet to be found. If Zilliqa can solve the scalability issue with their sharding solution they will have a massive first mover advantage and technical advantage over all other blockchain platforms. Though their network has yet to be stress tested the progress of the Zilliqa network is something to pay close attention to.

Current Status and adoption analysis

ZIlliqa became the first public blockchain to implement sharding when they launched their mainnet at the end of January 2019 [17]. The mainnet is currently being rolled out in iterations to ensure network security. Currently the team is predominantly focused on driving developer adoption of their smart contract language Scilla so that the scalability of the blockchain can actually be utilized by users via decentralized applications or products [18]. Some of the few limited DApps on ZIlliqa include Bolt an emerging markets data tool and video game called Emont Frenzy [19].  Zilliqa also has partnerships with other blockchain projects such as Bluzell and Genaro Network [19].

References

[1]https://docs.zilliqa.com/whitepaper.pdf

[2] https://cryptobriefing.com/zilliqa-closes-in-on-visas-8000-tps/

[3] https://cryptopotato.com/zilliqa-ico-evaluation/

[4]https://dl.acm.org/citation.cfm?id=2978389

[5]https://coincentral.com/zilliqa-beginners-guide/

[6]https://scholar.google.com/citations?user=7YoDkzsAAAAJ&hl=en

[7]https://finance.knect365.com/quantminds-international/speakers/alexander-lipton

[8]https://www.linkedin.com/in/alexander-lipton-aa2256bb/

[9]https://www.linkedin.com/in/stuart-prior-13294456/

[10]https://www.linkedin.com/search/results/people/?facetCurrentCompany=%5B%2213390327%22%5D

[11]https://blog.zilliqa.com/zilliqa-mainnet-the-launch-and-beyond-4cd7e113369f

[12] https://docs.zilliqa.com/techfaq.pdf

[13]https://blog.zilliqa.com/the-zilliqa-design-story-piece-by-piece-part-2-consensus-protocol-e38f6bf566e3

[14]https://messari.io/asset/zilliqa#overview

[15]https://etherscan.io/token/tokenholderchart/0x05f4a42e251f2d52b8ed15e9fedaacfcef1fad27

[16] https://coinmarketcap.com/

[17]https://blog.zilliqa.com/zilliqa-project-update-27-entering-a-new-era-506df64a0322

[18]https://blog.zilliqa.com/zilliqa-project-update-28-mainnet-growth-marketing-focus-a0521d28a07

[19] https://zilliqa.com/ecosystem-partners.html