Zilliqa (ZIL) ICO review

Review

Zilliqa’s platform, which was developed by researchers at the University of Singapore, is a high-throughput public blockchain platform – designed to scale to thousands ​of transactions per second.  The underlying technology that makes Zilliqa scale and achieve this kind of throughput,  is that of sharding  -  dividing the mining network into smaller groups called shards, each capable of processing transactions in parallel. In fact, the throughput in Zilliqa increases as the network expands.

 

Overview

Zilliqa is a new high-throughput blockchain platform that is designed to scale in an open, permissionless distributed network securely. At Ethereum’s present network size of 30,000 miners, Zilliqa would expect to process about a thousand times the transaction rates of Ethereum. In the most recent experiments, the Zilliqa private testnet network recorded a peak throughput of 2,488 transactions with 3,600 nodes.

 

What problems does Zilliqa aim to solve?

Scaling: Existing cryptocurrencies and smart contract platforms have widely recognized limitations in scaling. Average transaction rates in Bitcoin-, Ethereum-, and related cryptocurrencies have been limited to below 10 (usually about 3-7) transactions per second (Tx/s). Current smart contract execution requires every full node to perform the same computation which make smart contract execution slow and expensive.  As the number of applications utilizing public cryptocurrencies and smart contract platforms grow, the demand for processing high transaction rates in the order of hundreds of Tx/s is increasing.

Difficult to upgrade Existing Protocols: The limitations in scaling up existing protocols are somewhat fundamental — they are rooted in the design of the consensus and network protocols and therefore difficult to change to gain the throughput needed when mass adoption of the technology occurs

High energy costs for mining bitcoin and other cryptocurrencies due to the consensus algorithm.

High fees: Due to the inability of current blockchains to handle a large number of transactions, there are increasingly high fees to be paid because users have to compete to get their transaction processed.

 

How does Zilliqua aim to tackle these issues?

As the number of miners in the Zilliqa blockchain increases, its transaction rates are expected to increase as well. It’s design allows its transaction rates to roughly double with every few hundred nodes added to its network.

The Zilliqa blockchain would expect to process about a thousand times the transaction rates of Ethereum.

Computational sharding: is how Zilliqa takes a very different approach towards how to process contracts. The sharding approach relies on a new smart contract language that is not Turing-complete, but scales much better for a multitude of applications. The smartcontract language in Zilliqa follows a data flow programming style. The key advantage of employing a dataflow approach is that more than one instruction can be executed at once. Thus, if several nodes in the graph become activated at the same time, they can be executed in parallel. This simple principle provides the potential for massive parallel execution.

Redesign from scratch: Zilliqa’s solution is  a redesign from scratch and has been under research and development for over 2 years. The cornerstone in Zilliqa’s design is the idea of sharding — dividing the mining network into smaller consensus groups called shards each capable of processing transactions in parallel. If the mining network of Zilliqa is say 8000 miners, Zilliqa automatically creates 10 sub-networks each of size 800 miners, in a decentralized manner without a trusted co-ordinator. Now, if one sub-network can agree on a set of (say) 100 transactions in one time epoch, then 10 sub-networks can agree on a total of 1000 transactions in aggregate. The key to aggregating securely is to ensure that sub-networks process different transactions (with no overlaps) without double-spending.

Consensus not based on PoW: Zilliqa does not employ PoW to achieve consensus.  Therefore, PoW can be performed after, say every few hundred blocks. As a result, the high energy cost often associated with PoW will not apply in Zilliqa. In fact, the estimate cost ofrunning a Zilliqa node will be about 1/10 of running an Ethereum node today.

Higher throughput:  The unprecedented throughput of the Zilliqa blockchain implies that the processing fee pertransaction can be very low. Since miners reach consensus on several blocks with a single PoW, Zilliqa ensures a much more stable payout with low variance. Furthermore, In many of today’s popular blockchains, users have to compete for the few transactions processed per second. As a result, transactions with low or  insufficient fees experience delays in processing. Such issues will be significantly alleviated in Zilliqa as the number of transactions processed per second becomes several hundred times more and beyond.

 

How does the Zilliqa Blockchain work?

Network Sharding:  Zilliqa dynamically splits the network of blockchain nodes into different subgroups, called shards, with each shard formed to process and reach consensus on a subset of transactions. This way, disjoint subsets of transactions can be processed in parallel, and significantly boost the transaction throughput by orders of magnitude. Eventually, such transactions are merged into a new block that is committed to the blockchain.

Secure and Efficient Consensus Algorithm:  Zilliqa runs a secure and efficient consensus protocol. The protocol enables each shard to reach an agreement on the blocks to propose. The consensus protocol is based on the idea of byzantine fault tolerance  with heavy optimizations.  The BFT consensus protocol ensures that the resulting blocks are definitive, without the need of long confirmation times as required in the popular “longest-chain” rule in existing cryptocurrencies.

Transaction Sharding:  Zilliqa employs an account-based design. The account-based design  allows transactions to be sharded according to the sending accounts. This ensures that replay or doublespending attacks can be thwarted by the same shard of nodes.

Computational Sharding & Data-flow Smart Contract Language: The smart contract language in Zilliqa follows a dataflow programming paradigm. In the dataflow programming model, a smart contract is represented by a directed graph. Nodes in  the graph are primitive instructions or operations. Directed arcs between two nodes represent the data dependencies between the operations, i.e., output of the first and the input to the second. A node gets activated (or operational) as soon as all of its inputs are available. This stands in contrast to the classical execution model (as employed in Ethereum), in which an instruction is only executed when the program counter reaches it, regardless of whether or not it can be executed earlier.   The key advantage of employing a dataflow approach is that more than one instruction can be executed at once. Thus, if several nodes in the graph become activated at the same time, they can be executed in parallel. This simple principle provides the potential for massive scalable execution.

Profiteable Mining:  The unprecedented throughput of Zilliqa also has an important impact on the incentives that miners draw from transaction processing, i.e., gas fees (or transaction fees).  As the number of transactions processed per second becomes 200x more or beyond, the competition in terms of transaction fees will be less intense than on traditional blockchains. At the same time, the cost of processing a transaction on the miners’ side is also cut by orders of magnitude. The bar for transaction fees acceptable to miners will be lowered significantly.  Note that a low fee in Zilliqa does not necessarily imply that miners are insufficiently incentivized. On the contrary, due to its high throughput, the aggregated sum of incentives from several transactions can compensate the low fee per transactions.

 

Zilliqa Product Roadmap:

 

Future plans for Research & Development include:

The focus of Zilliqa Research is to lead the research and development of the platform from an initial implementation to a full public blockchain platform. The mission of Zilliqa will remain to further increase the scalability of the blockchain and dApps running on it to gain 100x to 1000x over today’s public blockchain platforms. To achieve that, there is a long journey of innovation and development.

Here an outline of some of the research ideas they are exploring:

State Sharding:  The first release of Zilliqa achieves scalability without state sharding. In essence, state sharding will alleviate full nodes from storing and receiving all blocks and transactions. This way it can further reduce the storage and communication load for blockchain nodes, and thus constitute another scaling-up factor to the throughput.

Secure Proof-of-Stake (SpoS): Proof of stake (PoS) schemes are a promising direction for efficient blockchain consensus protocols. However, at Zilliqa security has always been a top priority. PoS chemes are still at an early stage, and the security and decentralization of such schemes are still to be further studied and analyzed. Thus, Zilliqa is using building blocks on schemes that have been shown to be secure over time, e.g., proof-of-work and byzantine fault tolerance. However, given the significant performance gain from PoS for consensus algorithms, it is worthwhile investigating further into the PoS paradigm.

Storage Pruning:  Securely prune the dated blocks stored on the blockchain to reduce the storage requirements and ease the joining process for new nodes. They are considering multi-grade storage, compression of blocks and transactions as possible solutions.

Cross Chain Support: Zilliqa has every intention to complement other public blockchains and build a healthy ecosystem to provide end users a broad spectrum of platforms of choice for their applications. To this end, Zilliqa will seek technical solutions to support gradual cross-chain communication and potentially enable cross-chain applications.

 

Team 

Zilliqa is initiated by a team of renowned entrepreneurs and scientists, as well as engineers with strong expertise in cybersecurity and systems. Most of them have a PhD in computer science or engineering.  We will only list the most important members here:

Xinshu Dong (CEO) – PHD, NATIONAL UNIVERSITY OF SINGAPORE
Xinshu is a scientist and practitioner in building secure systems, ranging from blockchains to web browsers and applications. He was a technical lead for several national cybersecurity rojects in Singapore. The outcome of his research has been published at top international conferences.

More recently, he led the research and development of Anquan’s proprietary scalable and secure blockchain, deployed for financial and ecommerce applications. He is currently leading the Zilliqa team for developing a new public blockchain, Zilliqa, for highthroughput applications.

Prateek Saxena (Chief Scientific Advisor) – PHD, UNIVERSITY OF CALIFORNIA, BERKELEY
Prateek Saxena is a research professor in computer science at National University of Singapore, and has a PhD in Computer Science from UC Berkeley. He works on blockchains and computer security.

His research has influenced the design of browser platforms, web standards and app stores widely used today. He has received several premier awards such as the Top 10 Innovators under 35 (MIT TR35 Asia) in 2017. 

Yaoqi Jia (Blockchain Architect) PHD, NATIONAL UNIVERSITY OF SINGAPORE
Yaoqi is a Research Fellow at the National University of Singapore. He gained his Ph.D. in Computer Science from NUS. His research interests span web security and privacy, network security, distributed systems and applied cryptography. He has proposed solutions to addressing consensus and privacy issues in P2P systems.

His work has been published in top-tier security conferences, got acknowledged by various vendors including Google and Apple and has received attention from the media including Dailydot, Gizmodo and Techspot.

Amrit Kumar (Crypto Lead) – PHD, UNIVERSITÉ GRENOBLE-ALPES (FRANCE)
Amrit is a Research Fellow at the National University of Singapore. He holds a PhD from Université Grenoble-Alpes, France and was hosted at Inria’s Grenoble center.

Prior to his  PhD, he obtained an Engineer’s diploma from Ecole Polytechnique, France, where he  studied Computer Science and Mathematics. His research interests broadly span security, privacy and applied cryptography. 

Token Sale:                        Completed
Token standard:                    Ethereum ERC20
Tickersymbol:                        ZIL
Tokensupply:                         21,000,000,000
HardCap:                                USD 22,000,000
Tokenprice:                            USD 0.00389

 

Token distribution:

Category                                Percentage   ZIL
Miners                                       40%              8,4 billion (to be mined over 10 years)
Public, Early contributers      30%              6,3 billion
Company, Team, Agencies    30%              6,3 billion

 

How are Zilliqa tokens used?

There are two main entities in Zilliqa: users and miners. A user is an external entity who uses  Zilliqa’s infrastructure to transfer funds or run smart contracts. Miners are the nodes in the network who run Zilliqa’s consensus protocol and get rewarded for their service.

Zilliqa tokens  (AKA ZIL) represent a value for interaction with Zilliqa blockchain platform services. (e.g. launch nodes, provision smart contracts, etc.). The tokens will further allow individuals or organization to be rewarded in an open market for running public or private nodes for network consensus.

Opportunities

There are no vaiable solutions to solve the scalability and latency issues yet, although Ethereum is switching the network from PoW (Proof of Work) to Pos (Proof of Stake) and there there are some ongoing projects like EOS, Radix and Dragonchain that are trying to solve these issues, none of these have materialized yet.

Working product: They have a MVP with mainnet release expected in Q 2 2018

Scalability: They have demonstrated scalability, the throughput of their blockchain increases with the network size meaning they can handle a growing userbase by increasing the mining network

Cross-Chain compatibility: Zilliqa has already thought about future crosschain compatibility, for example they use Ethash for PoW which is the same mining algorithm as Ethereum, their transaction structure is also very similar as that of Ethereum. They are looking at developing a toolchain that could take some of the existing Ethereum smart contracts and transform them to code so thet they could run on the Zilliqa blockchain

Established Expert team:  Experienced management team with lots of academic experience in building infrastructure platforms

 

Concerns:

Sharding is not easy: The concept of sharding is nothing new. Sharding is a database design whereby rows of a database table are held separately, rather than being split into columns. Each partition forms part of a shard which may in turn be located on a serperate database server or physical location. There are numerous advantages to this approach but it also comes with a few disadvantages. There is a heavy reliance on the interconnect between servers, there is an increased latency when quering multiple shards, there are issues with consistency and durabililty when the network becomes more complex.

Competition: Although there are no live blockchains yet that offer the same throughput there are a lot of projects happening right now trying to address the scalablity issues, like Radix, Eos and ICON.  The project that goes live first and proves to be able to handle a large throughput will have a big advantage.

Programming Language: There is not a clear answer as to what programming language will be used to create smart contracts.

Conclusion:

Although they are not following through with their ICO, we think that Zilliqa will be a good investment. If they manage to go live with their product before the competition does and demonstrate the ability to process a lot of transactions in parallel they will have a huge potential. Their product addresses some of the most pressing issues plaguing blockchains today.

We consider it a good investment and will be looking to buy their tokens after it hits the exchanges. We will probably buy on the rebound.

Our Rating based on our pointing system is as follows:
Zilliqa gets a rating of  86 %