Various leading blockchains, including Ethereum, have struggled to keep up with the demands imposed by heavy traffic and growing networks. As a result, many competing projects have come into existence. Zilliqa is one of these projects, conceived with transaction speed and network scalability in mind.
History and Market Data
Zilliqa was created in late 2017 as an ERC-20 token and Ethereum-based testnet, and the project’s ICO ran during late December 2017 and early January.
40% of Zilliqa's ICO tokens were allocated to mining rewards, another 30% were allocated to early contributors, and the remainder were reserved for various Zilliqa team members, companies, and agencies.
Zilliqa’s ICO succeeded in raising $20 million worth of ETH tokens. Since then, the project has achieved a market cap totaling over $268 million, putting the coin at #33 on CoinMarketCap as of October 22, 2018.
Scalability and Sharding
Most blockchains distribute work across all of their nodes, but this has proven to be inefficient on large networks: it is harder to coordinate block validation across a multitude of nodes. Sharding improves on this by dividing nodes into groups with different roles. Each of Zilliqa’s shards contains 600 nodes and serves a different purpose.
As a result, the platform has achieved about 2500 transactions per second (TPS) on its testnet. This is a major improvement over Ethereum's current speed (~15 TPS) and is in line with the number of transactions that major credit card companies can perform. However, this speed may not be maintained once the mainnet goes live, and Ethereum itself may be able to handle 1 million TPS when it implements sharding.
Much like Ethereum, Zilliqa is intended to support smart contracts, which are programs that automatically execute transactions and are used to build dApps. Zilliqa allows smart contracts to be ported from Ethereum’s Solidity language or written in Zilliqa’s native Scilla language.
Scilla resembles Ethereum's Solidity, but there is one major difference: Scilla is not Turing-complete. This means that Zilliqa cannot handle some types of logic. Although Turing-completeness is a basic level of complexity that is found in most programming languages, Zilliqa intentionally avoids it. This limitation increases security by making it easier to audit smart contracts and test code for bugs.
This can alternately be seen as a division between transaction-related functions and state-related computations. Scilla supports functions but does not support states, which reduces the amount of communication that must take place between shards.
Scilla also allows smart contracts to be modified, whereas most blockchains keep smart contracts immutable.
Zilliqa’s network runs on a hybrid consensus mechanism that combines proof-of-work mining with Practical Byzantine Fault Tolerance (PBFT).
The proof-of-work mechanism allows miners to dedicate their hardware to discovering new Zilliqa blocks, just as they would mine Bitcoin. Mining rewards will be concentrated toward the beginning of the platform’s life -- 80% of the tokens allocated to mining will be issued during Zilliqa’s first four years.
After completing an initial amount of proof-of-work mining, miners will be assigned to a shard that runs on Practical Byzantine Fault Tolerance. PBFT will ensure that transactions are final, thereby removing the need for confirmations and preventing the temporary forks that many blockchains experience.
Zilliqa has the potential to be a significant competitor to Ethereum, even though its market cap ranks relatively low compared to other competitors such as Cardano, NEO, and EOS. It may become one of the first blockchains to focus on scalability in an effective way.
Additionally, the platform’s underlying changes may add an element of security and speed to smart contracts without drastically diverging from the goals of Ethereum. Whether Zilliqa can live up to its potential will be revealed when the mainnet goes live in early 2019.