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Is Zilliqa a Good Long-Term Investment?

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Written by   5
8 months ago

Table of Contents

  • Introduction

  • The issues with Bitcoin and Ethereum

  • What is decentralization?

  • What is Delegated Proof of Stake?

  • What is Sharding?

  • Relationship of Sharding and microblocks

  • What is Byzantine Fault Tolerance (BFT)?

  • What is ZIL coin?

  • When was the Zilliqa ICO?

  • When was the launch of Zilliqa mainnet?

  • Why is mining of ZIL ecological?

  • Why are gas fees cheaper with Zilliqa?

  • What are gas fees or prices?

  • What is Scilla language?

  • What are the advantages of Scilla?

  • Partner: Xfers and XSGD

  • Partner: Hg Exchange

  • The team behind Zilliqa

  • Zillicracy and ZilHive​

  • Zilliqa alliance with Poly Network Bridge

  • Benefits of the Poly Network Bridge

  • Launch of the Pillar Protocol

  • How Pillar Protocol allows leveraging of existing assets

  • Why Zilliqa is a good long-term investment


Introduction

In this YouTube video mini-series, broken into several parts, I am going to deep-dive into Zilliqa and how it works, and share on whether Zilliqa is a good long-term investment.

Watch all parts here:

The issues with Bitcoin and Ethereum

Popular blockchain networks, such as Bitcoin and Ethereum, are suffering from slow transactions speeds and expensive transaction fees. In fact, as of February 2021, the average transaction fee for Bitcoin is $14.25 USD per transfer! Since then, there are many cryptocurrency start-ups created to solve this scalability issue. Zilliqa is one of them. Using its own unique sharding technology, Zilliqa believes it can finally solve the scalability problem that has prevented many mainstream or traditional companies from testing the water with blockchain technology.    

What is decentralization?

In a simple way, the blockchain network needs to achieve consensus among all the participating nodes. So, in order to verify one transaction, the participating nodes have to agree that it’s indeed a valid transaction. That’s why it’s called “decentralization,” so no one centralized power can just say something, and everybody else is forced to believe it.

The bigger the network is, the harder it is to achieve consensus. The analogy is like when you are with four family members VS if you are with hundreds of other people. It will be easy to achieve an agreement with your family members, isn’t it? But, imagine if the same agreement has to be made among hundreds of people. Obviously, it would be much harder.

What is Delegated Proof of Stake?

Many newer blockchain platforms tried to solve scalability problems by introducing different consensus algorithms, especially Delegated Proof of Stake. These representatives will verify all the transactions in the blockchain

And then, there’s Zillqa. The core team of Zilliqa understood this exact problem with blockchain scalability. And of course, they don’t want a simple fix like using DPoS consensus and ignore the core of the scalability problem itself.

Zilliqa’s idea is to use sharding technology. The concept of Zilliqa’s sharding is to break down the nodes every 600 nodes. This breaking down process is called “sharding.” So, when there are 1200 nodes, we get two shards. When there are 1800 nodes, we get three shards. And so on.

What is Sharding?

​Each shard will have to process a certain part of the blockchain transactions. To give you an idea of how it is going to work, I will give you an example. Imagine when there are six shards in total. Each of these shards will have to process one-sixth of the blockchain transactions in the form of “microblocks”.

Relationship of Sharding and Microblocks

With sharding, each shard will be broken into "microblocks". When all of these shards have successfully finished their jobs in processing these microblocks, they will be mixed back into one single full block. This process is named DS epoch. On top of the sharding and DS epoch processes, Zilliqa also combines the concept of Byzantine Fault Tolerance (BFT) and the standard mining algorithm Proof of Work (PoW).    

What is Byzantine Fault Tolerance (BFT)?

With sharding, each shard will be broken into "microblocks". When all of these shards have successfully finished their jobs in processing these microblocks, they will be mixed back into one single full block. This process is named DS epoch.

On top of the sharding and DS epoch processes, Zilliqa also combines the concept of Byzantine Fault Tolerance (BFT) and the standard mining algorithm Proof of Work (PoW).

What is ZIL coin?

Let's now dive into Zilliqa’s native cryptocurrency, ZIL coin. Well, ZIL’s use case in the Zilliqa blockchain is more or less the same as how ETH is being used in the Ethereum network. It acts as an incentive t pay for transaction fees as well as for contract execution. On top of that, the ZIL coin also acts as an incentive to pay the miners.    

When was the Zilliqa ICO?

​The month-long Zilliqa ICO started in December 2017 and raised $22,000,000. At this time, 30 percent of the token supply was distributed to early and community contributors, 30 percent was held by the development team, and 40 percent was set aside as mining rewards.    

When was the launch of Zilliqa mainnet?

​With the launch of Zilliqa's mainnet in January 2019, Zilliqa became the first public blockchain platform in the world to successfully utilise sharding as a scaling solution.

Why is mining of ZIL ecological?

ZIL will be mined using a hybrid Proof-of-Work consensus protocol, which as mentioned above, won’t be the typical PoW blockchain. Thanks to Zilliqa's consensus mechanism, the ecological footprint of mining has considerably been reduced. Only 1 minute out of every 2-3 hours is needed to mine ZIL, allowing one to dual-mine other chains at the same time.  

Why are gas fees cheaper with Zilliqa?

So why are gas fees much cheaper for Zilliqa? The gas fees on the ethereum network fluctuate up and down depending on how congested the network is. Sometimes it can go as high as a few USD dollars.

But Zilliqa fees are extremely low because they can process transactions at a much faster speed. Additionally, ZIL is also used to reward miners for verifying transactions on the Zilliqa network.

What are gas fees or prices?

Zilliqa's consensus algorithm requires nodes to vote on each block and hence each transaction therein.Every transaction that goes to the network has a gas price -- which is the price (in $ZIL) per gas unit that the sender is willing to pay to the miners to process the transaction.

In order to ensure that miners do not impose a gas price of their own which could make it impossible to agree on transactions, the Zilliqa protocol maintains a global minimum gas price that all miners will accept. The network runs an algorithm to compute the acceptable global minimum gas price that the entire network will agree upon.

Essentially, the algorithm decides on the gas price depending on the network congestion in the last few epochs. Each payment transaction consumes 1 gas unit and therefore, the gas to be paid for a payment transaction is 0.002 ZIL. Scilla comes with an in-built gas accounting module that keeps track of gas consumed as the Scilla interpreter executes a contract.

What is Scilla language?

Scilla (short for Smart Contract Intermediate-Level Language) is a smart contract language developed for the Zilliqa blockchain. Smart contracts make it possible for mutually distrusting parties to execute an agreement with efficiency and transparency without the need of an arbitrator.    

What are the advantages of Scilla?

Scilla is a peer-reviewed smart contract language created by academics from the ground up. It has been designed as a principled language with smart contract safety in mind. An extensible static analysis framework and an automated scanner is provided to help developers identify generic security vulnerabilities directly at the language level. Scilla provides developers with more sanity-checkers in addition to static type-checkers. This makes comprehensive testing much easier.

Partner: Hg Exchange

​Taiwan’s largest digital asset platform, MaiCoin, has established a Hg Exchange together with Zilliqa. Hg Exchange has also signed a memorandum of intent with PhillipCapital, PrimePartners, RHT Capital and Fundnel.

What Hg Exchange is trying to do is to tokenize high-growth private companies like Airbnb, Uber, SpaceX, Grab, Didi Chuxing and the likes. For the first time, you could actually own tokenized shares of unicorn companies. It will be a liquidity avenue for private capital market trades.

The team behind Zilliqa

Also, the team behind Zilliqa are all computer scientists PhDs and they understand the technology of blockchain very deeply. In addition, there's also Zillicracy, a community-based initiative created to run in parallel with Zilliqa and the ZilHive initiative.    

Zillicracy and ZilHive​

Zillacracy focuses on expanding the Zilliqa ecosystem through community contributions or working with developers on projects suggested or even setting up projects suggested internally. Zillacracy was created in 2019 and has been in the limelight ever since, helping take some brilliant ideas and turning them into working products.  

Zilliqa alliance with Poly Network Bridge

The first major project that I'm going to cover is the Poly Network interoperability alliance with Zilliqa. The interoperability bridge will allow free flow of assets cross-chain amongst Zilliqa, Ethereum, Neo, Ontology, Binance Smart Chain and so on.

Blockchains such as Zilliqa, Ethereum, Bitcoin, etc., are independent and disconnected networks. Their disconnectedness is mainly due to the fact they are very different systems in the way they validate transactions and store on-chain data. Poly Network solves this fundamental issue by creating an interoperability layer that connects several chains together in a decentralised manner.

Benefits of the Poly Network Bridge

Through the Poly Network bridge, token holders and developers alike will benefit from Zilliqa’s comparatively lower transaction fees. With the bridge, developers will also be able to build cross-chain logic in their Scilla smart contracts in order to integrate them with smart contracts on all other supported blockchain. ​Switcheo’s DEX will also provide liquidity pairs which will enable users to earn trading fees and $ZWAP liquidity mining rewards.  

Launch of the Pillar Protocol

We are also waiting for the launch of the Pillar Protocol, which is a dapp on the Zilliqa blockchain. Once generated, bought, or received, Pillar can be used in the same manner as any other crypto-currency: it can be sent to others, used as payments for goods and services, and in the future, even held as savings through community features built on top of the Pillar Protocol.    

How Pillar Protocol allows leveraging of existing assets

Pillar Protocol allows them to take "leverage" on their existing assets. Say you have 1000 USD of ZIL. And you believe that the price of ZIL will still be going up. You can now collateralize your 1000 USD of ZIL and obtain say... 300 USD of Pillar.

Which you can then use to buy more ZIL. And as long as the gains you make from your Zil exceed that of the Pillar interest, it's a profitable endeavor.

Why Zilliqa is a good long-term investment

With both projects coming onboard, there will be a greater utilisation of ZIL, as well as a higher volume of transactions which bodes well for Zilliqa as a whole. With more practical demand for Zilliqa, more exchanges are likely to list ZIL, making this a worthy long-term investment, not unlike Ethereum in its earlier days.

I hope this five-part series have been useful for you. Happy investing!


Zilliqa Zebra provides news, updates, how-to, guides and all things related to the Zilliqa, the first public blockchain to implement sharding on its mainnet. Zilliqa Zebra also shares weekly price predictions on Zilliqa.

Zilliqa Zebra is an ardent supporter of the Zilliqa blockchain.

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Comments

ZIL also has some of the most consistent and active development teams in all of crypto. I've been holding 10k+ since March of last year, it's performed well! And zwap is insane.

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