Zilliqa ZIL: The First Blockchain with Successful Sharding
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Zilliqa ZIL: The First Blockchain with Successful Sharding

By 2sats | 2sats | 13 Jan 2022


*obligatory not financial advice*

 

What is Zilliqa?

Zilliqa is a smart contract blockchain that is highly scalable and can handle thousands of transactions per second. It accomplishes this by splitting its network into shards that can process transactions in parallel, it is the first project that has done this successfully. The developers want to make Zilliqa a platform for all kinds of use cases ranging from games and entertainment to DeFi applications. The project also wants to rival traditional payment infrastructures like Visa and MasterCard.

Sharding allows a blockchain to handle more transactions faster while still staying decentralized. Splitting the blockchain into multiple smaller parts allows the nodes to process transactions faster because multiple nodes can work on different shards and their transactions at the same time. Most other scaling solutions work by limiting the validators to a few very powerful computers, which makes the network more centralized. Sharding doesn't have this problem, in fact it can scale both speed and decentralization together because if more miners join the blockchain it can add more shards. This also lets Zilliqa keep its fees low and it can have transaction fees that are as low as $0.01 while Ethereum has fees of up to $10.

Zilliqa was the first one to utilize this scaling solution and it became quite popular. Other big projects like Harmony ONE are trying to improve sharding further and Vitalik Buretin is a big fan this type of scaling and will likely integrate it in ETH2.0.

The blockchain uses a mixture of Proof of Work and Proof of Stake. There are normal miners that process the transactions and computations and there are seed nodes that need to stake ZIL and handle the blockchain data to make it easy for other nodes to join the network. This keeps the entry of running a node very low while still giving ZIL coin holders the possibility of participating in the consensus. Zcash is planning on switching to PoS because this would lower the sell pressure from miners, Zilliqa achieves this too without requiring nodes to stake for mining.

One problem with sharding blockchains is that it can be difficult to build dApps on them. Building an application on a single layer is much easier and having many different shards could make it difficult to grow an ecosystem on them. Despite that Zilliqa is already supporting many different dApps. There are decentralized exchanges, NFT marketplaces, games, a music streaming service and even a few media apps that are rewarding the content creators.

 

 

The ZIL coin

ZIL is the native cryptocurrency of Zilliqa. It is used for transaction fees, for staking and for block rewards. If you want to run a seed node you need to stake at least ten million ZIL, but you can also delegate your coins to a node to help them and earn part of their block rewards. You can currently earn an APY of almost 15% by staking. Oddly, ZIL is not used for governance over the network, instead there is a separate governance token called gZIL.

There is a max supply of 21 billion ZIL. 30% was sold to investors, 30% went to developers, foundations and supporting agencies and the remaining 40% are used for mining and staking rewards that are distributed over a ten year period. The 30% set aside for developers were put under a vesting schedule that released the coins quarterly for the first 3 years. The miners are earning less than half of the supply which is honestly rather low and it will take them almost a decade before they have earned a big part of the supply.

There will be more demand for ZIL if the blockchain gets more users. Sharding is a great scaling solution with a lot of potential, but other projects like Harmony ONE and ETH2.0 are trying to improve it even further and both projects are much more popular than Zilliqa. It does have plenty of applications many of which are rather unique because there aren't many blockchains with applications for content creation. Still the blockchain hasn't been in the spotlight for a long time now. Maybe if ETH2.0 gets close to being finished it will drive more attention to other chains with sharding as well.

You can buy ZIL coins on Binance and KuCoin and you can store them on the ZilPay Wallet that can also be used interact with Zilliqa dApps. You can also store and stake the coin on a Ledger hardware wallet.

 

 

 

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Learn more about the Ledger hardware wallet

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