Table of Contents

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:

Part 1: https://youtu.be/GZYGTDrLPds

Part 2: https://youtu.be/pDdWWFmPe_E

Part 3: https://youtu.be/o5Rxy_sIdAA

Part 4: https://youtu.be/8Nrqk-6zfjE

Part 5: https://youtu.be/7byFLO9Gl0U

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 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”.

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.

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.

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!