Vee Finance, a decentralized finance platform, has officially confirmed its hack on Avalanche. On September 20, the hacker managed to transfer funds worth $35 million. In terms of assets, it was 8804.7 ETH (around $26 million) and 213.93 BTC (around $9 million). According to the report, the stablecoin was left untouched. As for the hacker, the report confirms that they have not yet transferred or processed the funds. The team is working to provide more details of the incident. Further,…
Blockchain technology is never-ending to answer the old scaling issue, and Zilliqa may be the first project to solve it.
Using sharding and a hybrid consensus mechanism, Zilliqa provides a secure network for high throughput DApps, eco-friendly dual mining, and non-custodial staking.
Zilliqa is less than five years old, and it is evolving at a rapid pace. In this review, we analyze its performance so far as we dissect its functioning mechanisms.
What Is Zilliqa?
Zilliqa project is the first public and permissionless blockchain that uses sharding to increase the size and solve blockchain scalability’s age-old problem. Through linear scaling, the chain should support the completion of thousands of transactions per second.
Zilliqa aims to succeed where other blockchains have failed repeatedly. For example, Bitcoin cannot process the massive demand for its network, even after more than a decade since its release. Another similar case is that of the Ethereum blockchain, whose limitations increase the gas prices for everyday smart contracts.
Zilliqa uses a sharding solution that scales simultaneously as the ever-growing network to avoid facing the same issues. This solution changes the traditional way through which a blockchain would reach consensus.
Since its release in 2017, Zilliqa evolved significantly to support smart contracts, staking, and yield farming. To facilitate smart contracts and transactions on the network, Zilliqa introduced a native utility token, called ZIL.
A brief history of Zilliqa
Zilliqa is the brainchild of Prateek Saxena, an assistant professor at the National University of Singapore School of Computing. Together with some of his students, Saxena compiled and published a paper in 2016. He proposed developing a sharding-based blockchain that could take the technology to a whole new level of efficiency.
The project caught Max Kantelia, a tech entrepreneur, and Juzar Motiwalla, the former president of the Singapore Computer Society. The two convinced Saxena to develop the blockchain under Anquan Capital’s umbrella, which the three eventually co-founded.
In 2017, a division of Anquan Capital, called Zilliqa Research, began developing the Zilliqa network under CEO Dong Xinshu, CTO Yaoqi Jia, and CSO Amrit Kumar.
Towards the end of 2017, Zilliqa managed to raise nearly $12 million worth of Ether through private funding. In early 2018, it raised another $2 million through an Initial Coin Offering (ICO) for its native token ZIL.
In May 2018, Zilliqa launched Scilla, a smart contract programming language, and in November of the same year, it launched its first testnet.
On January 31, 2019, Zilliqa launched its mainnet, enabling smart contract functionality and speedy transactions.
How Zilliqa Works
For many development teams out there, creating a blockchain is not impossible. However, the difficulty that most companies encounter is making it scalable. Any chain would function seamlessly with only a few nodes. But, when their number increases, reaching consensus becomes almost impossible to achieve.
Zilliqa uses a hybrid consensus mechanism to solve this issue, including proof-of-work (PoW) and Byzantine Fault Tolerance (BFT).
Through this unique mechanism, Zilliqa re-imagines the entire network every time 600 nodes that join the chain. In 2018, through a private testnet, Zilliqa proved that the network could manage as many as 1,218 transactions per second when 1,800 nodes were operating. When the number of nodes was doubled, the number of transactions processed every second increased accordingly to 2,488 tx/s.
Zilliqa divides the number of mining nodes on the network into 600 nodes to reach this new blockchain scalability level. Each group is known as a “shard.”
Also known as sharding, this technique helps the network increase in size while maintaining a good transaction speed every time it adds 600 nodes. For example, if 3,600 nodes are operating, their mining power is divided into 6 shards. Each of these shards would only process 1/6 of the network’s transactions. This way, the entire chain is not forced to support the weight of all the transactions on the network. The more shards operating on the chain, the faster and more efficient the network will be.
Every node on the Zilliqa network processes a transaction in parallel with other nodes within a shard. At the same time, each shard processes transactions in parallel with other shards. Every processing period is called “a DS epoch.” When an epoch ends, all the micro blocks representing all the shards on the network become part of a full block, subsequently added to the blockchain.
The entity managing the shards on Zilliqa is called the “DS Committee,” composed of a few randomly selected nodes on the network. Each DS epoch, the Committee decides the distribution of nodes in shards and later assigns the transactions to each shard for processing. The Committee members are also responsible for assembling the full block of transactions at each epoch’s end.
Consensus on Zilliqa
Zilliqa employs a hybrid mechanism to reach consensus. On the one hand, it asks miners to provide Proof-of-Work (PoW) when operating as unique nodes on the network. However, it doesn’t use the same mechanism to reach a consensus.
After a node provides PoW, it enters a shard where Zilliqa uses Practical Byzantine Fault Tolerance consensus. Through this mechanism, all the nodes inside a shard have to agree on a mini block. Their agreement is next evaluated by the DS Committee, which confirms it before adding it to the final, full block.
Since the Byzantine Fault Tolerance consensus is a mechanism with finality, the blockchain cannot be the subject of forks.
Contracts, DApps & State Sharding
Contrary to other blockchains that use smart contracts to confirm transactions, on Zilliqa, sharding transactions are quick and effective.
Zilliqa users can assign transaction verifications to random shards, and each verification is valid without additional communication among the shards.
On Zilliqa, DApps that require high throughput can execute rapidly and in a secure environment without wasting time checking, storing, or changing states.
What is Scilla?
Zilliqa uses a native programming language, called Scilla, to make functional programming on the network more efficient and secure. This safe-by-design smart contract language ensures a friendlier approach towards static checks and formal verification.
Scilla is an incomplete Turing language that helps support communication between the nodes and differentiate between Zilliqa-based functional contracts and off-chain contracts. This way, it enables users to know if a contract is safe and verifiable before accessing it.
What is the Zilliqa token (ZIL)?
ZIL is an ERC-20 token that Zilliqa launched in 2018 with a capped supply of 21 million units. While, at the moment, there is a little over 10 million ZIL in circulation, the developers plan to mint the rest of the tokens within the next ten years as the block mining reward slowly decreases.
According to the Zilliqa whitepaper, the network should release 80% of the tokens within the first four years, and the rest of 20% in the remaining six years.
During the launching event, Zilliqa distributed the ZIL tokens as follows:
- 10% of the tokens were reserved for Anquan Capital
- 12% for Zilliqa Research
- 5% for contemporary and future Zilliqa team members
At the time of this writing, ZIL had a market capitalization of $848,203,587. One ZIL was trading for $0.076 and had a 24-hour trading volume of $172,046,056.
The Bottom Line – What is Zilliqa?
Zilliqa is a relatively new blockchain project that has made a significant advance in solving the age-old scalability issue that earlier blockchains still struggle to overcome. So far, we can consider Zilliqa to be a breakthrough in blockchain tech, even though there is still a long way to go.
Zilliqa brings more credibility for sharding, a database architecture pattern that others have tried to implement and failed. The hybrid consensus mechanism also opens the door for new ways of ensuring transaction and communication security on networks that new blockchains will most likely want to emulate.