Blockchain-based financial applications are gradually increasing in numbers daily. One could easily deploy a smart contract or make a transaction to anyone in the world with just the push of a button. However, these existing platforms have well-known limitations.
With more people utilizing crypto and smart contract platforms worldwide, the amount of transactions done on various blockchain platforms requires a faster transaction speed to scale. Although several platforms are currently trying to fill this gap, there haven’t been completely successful at it.
Fortunately, Zilliqa is a platform that seeks to solve this huge problem of slow transaction speed through sharding — a unique blockchain approach.
In this article, you’ll learn about Zilliqa, how sharding works and what ZIL coin is used for in the ecosystem.
What is Zilliqa?
Zilliqa is a project that aims to make blockchains more scalable and complete thousands of transactions per second. The platform also allows users to build decentralized applications and send fast and secure payments.
The core feature of Zilliqa is that the project employs sharding as a second layer scaling solution to blockchain’s slow transaction issue. Sharding is a technique that splits the network into several pieces/shards allowing each node to process a fraction of the network’s transactions simultaneously.
Zilliqa is home to many decentralized applications (DApps), each with its native tokens. There are currently 3,795 tokens available in the Zilliqa ecosystem. The platform also allows for staking and yield farming.
Zilliqa’s development started in June 2017, and the project’s main net was fully launched by June 2019.
Zilliqa’s native token, ZIL, deploys smart contracts and processes transactions. Currently, ZIL has a Coinmarketcap ranking of #106, with a max supply of 21,000,000 ZIL coins.
Zilliqa claims to be the world’s first public blockchain to rely entirely on a sharded network. This feature allows the platform to achieve faster rates of transactions per second while maintaining a high throughput.
Because each shard processes transactions individually, the number of transactions processed per second increases as each network grows and the shards increase. Furthermore, transactions are immediately recorded on Zilliqa’s Blockchain after processing, reducing confirmation time.
Zilliqa Use Case: Staking and Earning Rewards
One major utility of the ZIL coin is that it allows users to stake and earn rewards in Zilliqa. To stake, users are required to ‘stake’/lock their ZIL tokens with nodes that provide services to the network.
Anyone can stake ZIL and earn rewards, but they need to buy and hold ZIL tokens before doing so. To get ZIL requires the user to choose one of the six available Zilliqa-compatible crypto wallets. Next, the wallet will be used to store their ZIL tokens. After that, the user must connect their wallet and head over to the staking portal.
The staking rewards on Zilliqa isn’t fixed. It largely depends on the current annual percentage interest of the platform. For instance, if a user stakes 2,000 Zilliqa for 12 months at a staking reward of 12% APY, the reward earned for 1 year could be about 254.66 ZIL.
There are different staking platforms on the staking portal, each with its staking seed node operator (SSN). SSNs are nodes in Zilliqa’s network that improve and maintain the network.
Once the user selects the SSN, they can then stake any amount of ZIL they choose and earn staking rewards over time. This staking technique allows the user to earn rewards without actively participating in the network as the SSNs do all the work.
It is important to note that you can change your seed node operator anytime. Also, each delegator must stake a minimum of 10 ZIL to ensure extra gas isn’t needed to withdraw rewards.
Zilliqa Use Case: Governance on Zilliqa
As a token holder, you can vote on submitted proposals and propose changes in Zilliqa’s network. Some of the ideas voters can make decisions include; new protocol features, updating rewards/fees structures, staking mechanism, and issuance of grants via grantsDAO.h
ZIL holders can vote on preferred changes by holding some Governance ZIL (gZIL) tokens, Zilliqa’s network governance token.
gZIL is a token created explicitly for Zilliqa governance and was launched on 14th October 2020. The token allows long-term ZIL holders and network participants to become decision-makers in the network.
This voting system can be likened to a DAO governance structure where users can vote and make proposals powered by $ZIL.
Holding ZIL tokens allows a user to buy and hold gZIL easily. This is done by exchanging ZIL coins for gZIL on ZILSwap, Zilliqa’s on-chain decentralized exchange. Each gZIL represents one vote, and according to Zilliqa, the more a user holds, the more voting power they have.
By holding gZIL, a user can: share their views on open proposals, submit their proposals, and vote for or against submitted proposals in the network. Voting and governance are done on Snapshot, Zilliqa’s voting portal. To participate, a user must hold gZIL in their wallet, connect the wallet to the portal and cast their votes (gZIL) on submitted proposals.
It is also important to note that Zilliqa incentivizes users for holding and voting with gZIL.
Zilliqa Use Case: Interacting With the Zilliqa Ecosystem
Another use case of ZIL is that users can use the token to interact with Zilliqa’s vast ecosystem. Just by holding ZIL, you can participate in a wide range of activities such as:
Buying and selling NFTs: With ZIL, you can mint, sell and own NFT assets on Zilliqa’s marketplaces. There are six marketplaces available. To join the NFT and creator economy on Zilliqa, you have to buy and hold ZIL tokens in a wallet such as Zilpay. Then, you can select a marketplace of your choice. Each marketplace allows you to create an account, connect your Zilpay wallet and start deploying NFT smart contracts with the ZIL tokens in your wallet.
Building decentralized applications (DApps): As mentioned above, Zilliqa is home to many decentralized applications. What’s exciting is that anyone can develop and launch their DApps on Zilliqa with ZIL tokens. Like minting NFTs on Zilliqa’s marketplaces, the user has to get a wallet and buy ZIL. DApps are powered by smart contracts which aren’t free to deploy. The ZIL in the wallet acts as gas and facilitates the transactions, just like in Ethereum.
Creating tokens and raising funds: Another benefit of holding ZIL is that one can create their token. To do this, you have to visit Savant IDE, Zilliqa’s web-based development environment. There, you can input the token details and launch the token with the $ZIL in your wallet. In addition, you can raise funds for your token by listing it on ZILSwap Initial Liquidity Offering (ZILO). There, ZWAP (another of Zilliqa’s tokens) holders can provide liquidity on tokens of their choice before they launch.
What Makes Zilliqa Unique?
Zilliqa’s entire ecosystem operates in so many ways that stands it out from other existing platforms. For instance, while a blockchain like Ethereum can only handle 15 transactions per second with 25,000 full nodes, Zilliqa has reached about 1,218 transactions per second with only 1,800 full nodes.
In addition, ZIL has a standard Blockchain transaction fee of 0.1 ZIL. However, deploying smart contracts costs more as the codes require more data to be executed successfully. Zilliqa’s governance community decides on the fees.
Furthermore, similar to Bitcoin, Zilliqa utilizes a proof-of-work (PoW) consensus protocol to defend against malicious activities and hacks. However, it further strengthens its security by combining Proof of Work (PoW) and Practical Byzantine Fault Tolerance (PBFT).
By combining these two consensus protocols, Zilliqa’s network ensures that all nodes agree before processing transactions. Each node is incentivized with a portion of the block reward for validating transactions.
With a solid team behind the project, the platform’s vast ecosystem, and ZIL’s utility, Zilliqa certainly has more potential to grow into an altcoin to be reckoned with.