SUMMARY

Zilliqa (ZIL) is a blockchain platform that is designed to securely scale processing transactions in an open, permissionless distributed network. Zilliqa’s core feature is a concept described as “sharding”, which in simple terms is the division of the network into several smaller component networks capable of processing transactions in parallel. This allows for scaling of transaction rates with increasing mining network expansion.

THE DEMAND / THE MARKET

One of the criticisms you may have heard about cryptocurrencies is that there is an inverse relationship between the speed of transactions and use. Transaction speeds tend to decrease as more people are using the network. For example, the transaction speeds of Bitcoin is 7/s, Ethereum is 20/s, and Ripple is 1500/s. These speeds fall severely short in comparison to their payment processing in centralized operators such as VISA or MasterCard, which are capable of thousands of transactions per second (Figure 1) [1-8]. The challenge associated with the scalability of are deeply rooted in the design of the consensus and network protocols.

Figure 1 – transactions per second

Zilliqa, using a concept which they describe as “sharding”, is able to securely scale in an open, permissionless distributed network. They do this by dividing the network into smaller component networks which are capable of processing transactions in parallel. Thus, by expanding the mining network, Zilliqa is able to increase transaction rates.  Using this concept Zilliqa is capable of rival the transaction speeds of traditional centralized payment methods such as VISA and MasterCard. For instance, Zilliqa states that with a network size of only 10,000 nodes, they are able to process transaction speeds that match VISA and MasterCard, with the advantage of lower fees. To expand further, Zilliqa design allows for its transaction rates to double with every few hundred nodes added to its network. To put this in perspective, with only 3600 nodes, which is only 1/10th of Ethereum network, Zilliqa is processing about 2500 transactions per second.

With the ever-growing concerns from various governments and governing bodies regarding the high energy consumption of mining companies, Zilliqa’s ability to reduce energy consumption is certainly a positive attribute. The high energy costs associated with mining is due to the mechanism of which blocks are created. This mechanism is known as Proof of Work (PoW), which essentially pits processors against difficult mathematical problem, where the solving the problem leads to being verified. Arriving to the answer to this complex mathematical problem requires significant computational power and can consume significant amount of energy. Currently, in order to create a block, all miners must work simultaneously to arrive at the mathematical solution, at the end of which only one can succeed. As a result, the computing power of other process is completely wasted.

Similar to other existing blockchain platforms such as Ethereum and Bitcoin, Zilliqa leverages PoW to establish the identity of the processor. However, Zilliqa combines PoW with a practical Byzantine Fault Tolerant (pBFT) protocol. In layman terms, miners use PoW to establish their identity on the blockchain, once established, the miner is assigned to a consensus group, described as sharding, where multiple rounds of pBFT consensus are run. As a result, there is significantly reduced energy costs associated with PoW. Zilliqa states that the costs of running a Zilliqa would be at about 1/10 of running an Ethereum node today. Additionally, sharding allows for a constant mining cost per transaction, meaning that the mining cost for the network / number of transactions processed will stay constant. Further, miners can expect high aggregated fees (due to number of transactions performed) while maintain a low transaction fee for the users. [9-11]

ZILLIQA’S ROADMAP

Zilliqa was started June, 2017, with a subsequent publication of their whitepaper in August, 2017. By December 2017, they released the public testnet v1.0 which demonstrated new nodes, linux-based software, wallet software performance optimizations, along with feedback and bug fixes. This came subsequent to the release of experimental results from their internal testnet v0.1 in September 2017, and experimental results of internal testnet v0.5 in October 2017. Their current roadmap for 2018 includes the following:
First quarter 2018
Zilliqa (ZIL) is a blockchain platform that is designed to securely scale processing transactions in an open, permissionless distributed network. Zilliqa’s core feature is a concept described as “sharding”, which in simple terms is the division of the network into several smaller component networks capable of processing transactions in parallel. This allows for scaling of transaction rates with increasing mining network expansion.
Transactions Per Second
  • Releasing public testnet v1.5
  • Resilience and recovery
  • Support for basic features of smart contracts
  • Performance optimizations
  • Feedback & bug fixes Second quarter 2018
  • Launching the first version of Zilliqa public Mainnet
  • Computational sharding for smart contracts Third quarter of 2018
  • Releasing dApps

Figure 2 – near term roadmap of Zilliqa

ZILLIQA’S TEAM

Zilliqa’s team consists of mostly PhDs in computer scientists. You can read about the team in detail in Zilliqa’s position paper [10]. Below is a few highlights of members of the team and advisors.

Figure 3 – Zilliqa notable members and advisors

Xinshu Dong, PhD – CEO
  • Technical lead for several national cybersecurity projects in Singapore.
  • Led the research and development of Anquan’s proprietary scalable and secure blockchain – deployed for financial and ecommerce applications.
  • Has had various publications surrounding the topics in the cybersecurity space.
Christel Quek – Head of marketing
  • Co-founder of BOLT – live TB and gaming service with over 3M users
  • Founder of Pin8cle – strategic consultancy to turn start-ups to rev-ups
  • Regional social lead at Samsung Asia
  • Head of content at Twitter
Prateek Saxena – Chief Scientific Advisor
  • PhD in Computer Science from UC Berkeley.
  • He has received several premier awards such as the Top 10 Innovators under 35 (MIT TR35 Asia) in 2017.
Antonio Nicolas Nunez – Core Dev
  • Software Engineer at Gemalto – Publically traded company. One of world’s largest sim card manufacturing companies.
Max Kantelia – Visionary and Co-founder
  • Financial services entrepreneur with 25 years’ experience of building professional services and technology firms in Europe, the US and Asia
  • He is a Co-Founder of Anquan Capital in Singapore and is on the board of Aeriandi (Oxford) and untapt (New York), both fast growth deep technology companies in the areas of voice technology and artificial intelligence.
Alexander Lipton – Advisor
  • Founder and CEO of StrongHold Labs, Partner at Numeraire Financial, Co-Founder and Advisor of Distilled Analytics, Connection Science Fellow at MIT Media Lab and Visiting Professor of Financial Engineering at EPFL.
  • His prior experience includes Managing Director at Bank of America Merrill Lynch, leading the quant group.
  • Also worked for Citadel Investment Group in Chicago, Credit Suisse, Deutsche Bank and Bankers Trust.
Loi Luu – Advisor
  • He developed Oyente, the first open-source security analyzer for Ethereum smart contracts.
  • Co-founded SmartPool, another open source project which embraces decentralization of mining pools in existing cryptocurrency.
  • Founder of Kyber Network
Stuart Prior – Advisor
  • Fintech veteran with more than 20 years of experience in Corporate and Investment Banking.
  • Specializes in leading corporate banking initiatives for the adoption of blockchain technology and Crypto Finance.
  • Has worked with Credit Suisse and Deutsche Bank.

TOKENS and SUPPLY

Tokens in the Zilliqa platform are called “Zillings” or ZILs for short. ZILs only give platform usage rights to the holders to pay for sending transactions and running smart contracts. Zilliqa has a finite supply of 21 billion tokens, of which 60% will be in existence at the token generation event.
  • Ticker: ZIL
  • Token type: ERC20
  • ICO Token Price: 1 ZIL = 0.0038 USD (0.0000084656 ETH) or 116,060 ZEIL per 1 ETH
  • Locked ETH at $450 USD/ETH
  • Fundraising Goal: $22M USD
  • Sold on pre-sale: $20M USD (PRE-SALE + STRATEGIC INVESTORS)
  • Bonus Structure: 10-15% presale bonus for early contributors
  • Total Tokens: 21,000,000,000
  • Available for Token Sale: 30%
  • Token Distribution: 30% to crowd sale contributors, 40% to miners, 30% to project for research and development, bounty programs, team allocation
  • Whitelist: YES
  • Know Your Customer (KYC): YES
  • Could not participate in ICO: USA, CHINA, JAPAN
  • Min/Max Personal Cap: 2 ETH / 5 ETH

The allocation of proceeds are as follows:

  • 80% for Zilliqa’s R&D and operations for next 3-4 years
  • 15% to Anquan Capital Pte. Ltd. – the company that developed the core technology behind their scalable blockchain
  • 5% awarded to the founding team who have been developing Zilliqa

KEY PARTNERSHIPS AND ASSOCIATIONS

Figure 4 – Zilliqa token distribution and allocation of proceedings.

November 2017, Zilliqa announced that they have partnered with Mindshare [13]. Mindshare is a global media agency that is part of the WPP. Mindshare is a global marketing and advertising company. This exclusive partnership will involve testing whether Zilliqa’s blockchain protocol to address pervasive industry challenges such as, contextual advertising in relation to fake news. They also hope to develop strategic initiatives around data privacy and develop an industry-wide tokenisation program, which can be used for publisher and content scoring.
Additionally, there are numerous institutional investors, and there seems to be an impressive amount of corporate and financial presence within the team itself. The list of institutional investors can be found on the Zilliqa website, and include Bitcoin Suisse, Signum Capital, FBG Capital, and many more.
On Feburary 13, 2018, Zilliqa announced that they have partnered with Bluzelle to provide an integrated solution so that users building dApps with Zilliqa as the underlying blockchain can use Bluzelle for decentralized data storage [14].

COMPETITORS AND KEY CONCERNS

There are various other projects that are being developed in congruent with Zilliqa that are attempting to tackle the issue of scalability. These include Raiden Network, Lightning Network and Plasma Protocol. Raiden Network and Lighting Network require new set of nodes along with the currently existing ETH and Bitcoin nodes. Zilliqa will not, as it is being developed from the ground up with scalability in mind. Additionally, Raiden Network and Lightning Network require two participants to agree to a transaction on a separate channel, after which their transaction is updated on the blockchain. Plasma protocol is being developed by Ethereum co-founder Vitalik Buterin and it plans to reframe all blockchain computation into a set of MapReduce functions, and an optional method to do Proof-of-Stake token bonding on top of existing Blockchain with the understanding that the Nakamoto Consensus incentives discourage block withholding [15]. In simpler terms, Plasma will be a “side-chain” solution and Raiden and Lightning Network will be an “off-chain” solution. Additionally, side-chain and off-chain solitons do not make the main chain scalable. Lastly, side-chain and off-chain solutions will not provide the same security resilience and decentralization guarantees as seen by the on-chain scalability solution as seen in Zilliqa
It will be challenging to say which will be the most widely adopted between the three stated above. Zilliqa’s advantage may be that they are more focused with regards to their business development and planning. They are focusing their services to niche markets where high-throughput use is actually needed, such as advertising. The deployment of their testnet which is set to be release in first quarter of 2018.

ZILLIQA HIGHLIGHTS

Let us discuss some of Zilliqa’s highlights which the writer believes will make the long-term potential of this company a promising one.
  • One of the first blockchain platforms designed to securely scale processing transactions in an open, permissionless distributed network.
  • Core feature – sharding – which is the division of the network into several smaller component networks capable of processing transactions in parallel.
  • Zilliqa is capable of rival the transaction speeds of traditional centralized payment methods such as VISA and MasterCard.
  • Significantly reduced energy costs associated with PoW. Costs of running a Zilliqa would be at about 1/10 of running an Ethereum node today.
  • The mining cost for the network / number of transactions processed will stay constant.
  • High aggregated fees for the miners and low transaction fee for the users.
  • The team (founders, developers and advisors) is very impressive with great experience and network.
  • Significant Institutional influence, interest and investment.
  • Total token supply ZIL is 21B.
  • Currently Zilliqa is trading at $0.059 USD with a market cap of $383M USD.
  • Circulating supply of 6.5B with a total supply of 12.6B.
  • Key partnerships with Mindshare and Bluzelle.
  • Targeting a niche market where their services are actually needed, instead of attempting to tackle the whole market like the competitors stated above.

 

 

FINAL WORDS

Zilliqa falls within the category of blockchain companies is aiming to provide a much-needed solution to a need. Zilliqa is unique in that it is the only on-chain scalability solution, thus providing a solution that is the most secure of the other suggested solutions. Zilliqa has been able to demonstrate proof of concept and has begun to make partnerships in niche markets that will help Zilliqa grow as a company. The tokens can be purchased at a price that does not differ significantly from the initial coin offering price. It is extremely challenging to place an evaluation on the company. There are various variables that could play a role in the growth of this company. Therefore, providing a price target for ZIL is nearly impossible. ZIL reached as high $0.16USD in late January 2018, the writer believes that ZIL could reach $0.15USD (300% or 3-fold) within the next 3-6months and may reach $0.20-30 (400-600% or 4-6-fold) by the end of the year, depending on various variables described above. Once established, Zilliqa’s technology will be adopted by other companies in their niche who may also require their services.

RESOURCES:

1. https://usa.visa.com/run-your-business/small-business-tools/retail.html
2. https://ripple.com
3. http://www.altcointoday.com/bitcoin-ethereum-vs-visa-paypal-transactions-per-second/
4. https://themerkle.com/crypto-vs-visa-can-denarius-compete-when-it-comes-to-transactions-per-second/
5. https://bitcoiner.today/en/dash-launches-a-dash-core-update-that-will-make-your-transactions-cheaper-and-even-faster/
6. https://steemit.com/cryptocurrency/@cyberblock/top-9-market-cap-blockchains-ranked-in-order-by-transaction-speed-lets-see-where-steem-fits-in
7. https://www.ethnews.com/the-raiden-network-could-allow-instant-transactions-in-ethereum
8. https://blockgeeks.com/guides/blockchain-scalability/
9. https://docs.zilliqa.com/whitepaper.pdf
10. https://docs.zilliqa.com/positionpaper.pdf
11. https://arxiv.org/pdf/1801.00687.pdf
12. https://blog.zilliqa.com/more-details-on-zilliqas-token-generation-event-4e1b78e0cf5a
13. www.marketing-interactive.com/mindshare-partners-up-with-blockchain-firm-zilliqa/
14. https://blog.bluzelle.com/bluzelle-first-wave-of-collaborations-efb2bd0cf33d
15. https://plasma.io