Sharding and Scilla: Is Zilliqa a Good Investment for the Future?

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Is Zilliqa a good investment, considering the hype behind sharding and Scilla? One of the most significant problems cryptocurrencies and their blockchains face today is scalability. Unlike today’s leading blockchain networks, such as Bitcoin and Ethereum, Zilliqa (ZIL) was built from the ground up to tackle this issue. Zilliqa’s main draw is its ability to clear thousands of transactions per second (TPS), allowing advanced financial instruments to be built on top of it. The network may be used to incorporate a range of blockchain-based services, such as data-driven DApps and smart contracts.

If you’re eager to learn more about Zilliqa and where your opportunities lie in regard to investing in it, you’ve come to the right place. In this article, we’ll take a deep dive into explaining Zilliqa and determining if it’s a good investment for the future.

What Is Zilliqa?

Before asking if Zilliqa is a good investment, it’s important to first understand the basics of the project. Zilliqa is a smart contract network with a sharded architecture that seeks to solve the scalability issues facing other blockchains. Zilliqa’s sharded structure was designed to exponentially improve upon the typical first generation transaction rate of 5–20 TPS. It does this by enabling simultaneous chains to perform transactions in parallel, boosting the network’s total performance and capacity.

In addition to scalability, Zilliqa offers a smart contract layer that allows users to create smart contracts using Scilla, the company’s native programming language. The network also uses a hybrid proof of work/BFT mechanism to achieve consensus on contract executions and payments. We’ll go into depth about its consensus protocol later in the article. 

Zilliqa has launched a staking scheme in the hope of “raising the distribution of node operators.” Its shared blockchain network enables developers to create smart contracts and DApps.

The History of Zilliqa

Zilliqa is a Singapore-based project, developed out of the National University of Singapore as a blockchain thesis project. Prateek Saxena and Loi Luu coauthored a white paper in 2016 that shed some light on the idea of blockchain sharding.

Following publication of the white paper, Saxena founded Anquan Capital, and Loi Luu founded Kyber Network. Shortly after, Xinshu Dong was hired as the head of engineering at Anquan Capital, and the company agreed to begin the Zilliqa project.

In June 2017, Zilliqa was launched. It was cofounded by Amrit Kumar, the project’s chief scientific officer; Jia Yaoqi, the project’s chief technology officer; Xinshu Dong, the project’s former chief executive officer; and Max Kantelia, an advisor and board member. These individuals are PhD computer scientists, researchers and engineers. That’s how Zilliqa got its start.

In a private fundraising round at the end of 2017, Zilliqa raised the equivalent of $12 million in ETH. Because of the rising price of ETH, that initial private investment rose to a significant value of the project’s hard cap of $20 million.

In May 2018, the Scilla smart contract programming language was released. The testnet went live in November of that year, and the project invited miners and developers to help test the network. Zilliqa then launched smart contract functionality and transactions in 2019.

How Does Zilliqa Work?

Zilliqa’s sharding is a big reason why many users peg Zilliqa as a good investment for the future. In well-established blockchains, such as Bitcoin and Ethereum, miners attempt to solve the same set of transactions in a block. Things happen in a logical, sequential order. Sharding, however, splits a blockchain network into “shards,” each of which solves a portion of the block in sync with others.

Sharding can be compared to dividing a team of people into smaller groups to accomplish a large task. So rather than everyone attempting to achieve the job all at once, different groups complete different sections in order to achieve the task. Thus, sharding makes transaction handling much quicker and more effective. The better the network can handle transfers, the more nodes you have joining it. It’s like having more subgroups to help you crack a puzzle.

Zilliqa held an initial coin offering (ICO) in January 2018 and raised $22 million. Its native utility token, ZIL, functions as a mining reward, gas for contract execution, and tender for paying transaction fees, similar to the way other DApp networks such as Ethereum function.

The Ethereum network’s gas fees fluctuate based on how congested it is (although it’s hoped that Ethereum 2.0 will resolve this issue, among others). Zilliqa’s fees, on the other hand, are relatively low due to its ability to handle transactions at a much quicker rate. ZIL is also used to pay miners for checking transactions on the Zilliqa blockchain.

A network’s consensus protocol is a framework for reaching a compromise among users. For a transaction to take place, the Bitcoin consensus protocol needs more than half of all nodes to agree. To reach an understanding, Zilliqa’s blockchain employs two levels to its consensus protocol. This is referred to as a hybrid framework, since it has multiple layers. These layers are as follows:

Shard Layer

Sharding acts as a preparation layer for the formation of whole blocks. Shards only process micromodules, which are small pieces of larger blocks. The shard layer’s nodes only need access to a limited amount of data, so they don’t need to connect with other shards. These micromodules then move onto the DS layer.

DS Layer

A DS committee is made up of a small number of randomly chosen nodes. This group of DS nodes then joins the macroblocks together to form a single block and decides if it’s valid. These nodes have direct access to the blockchain, enabling them to make final decisions on individual blocks.

For concurrent transaction processing, Zilliqa makes use of shards. For agreement on legitimate transactions, each shard and the DS committee use an optimized Byzantine fault tolerant (pBFT) mechanism. Blocks in pBFT use a deterministic finality, unlike the Nakamoto Consensus, found in Bitcoin, which uses a stochastic finality. As a result, multiple block validation is unnecessary.

What Is Sharding?

In a nutshell, sharding is a database splitting method commonly used by blockchain networks to attain scalability. Shards verify “microblocks” at the same time as other shards. The microblocks are then merged to form a new block on the blockchain. This is done to improve the transaction processing capacity of the blockchain network and promote overall efficiency.

The key advantage of sharding is that the blockchain only has to store and process transactional data across the nodes of a single shard. Otherwise, the data would have to pass through all of the network’s nodes. As a result, the network would become progressively slower with each new user. Sharding solves this problem by dividing a single chain into parallel chains. 

What Is Zilliqa Used For?

Zilliqa has gained plenty of traction among crypto enthusiasts, thanks to its potential for versatility and scalability. This is ultimately why many users agree that Zilliqa is a good investment. The crypto world has been waiting to see how the Zilliqa network will provide the services it’s been promising since its ICO in 2018. So who stands to benefit the most from Zilliqa? Zilliqa is the first blockchain to enable sharding on its mainnet, leading to scalability, fast transaction times and low fees. 

In the midst of the DeFi boom, Zilliqa is increasingly attractive to developers of DApps and smart contracts. By utilizing Scilla — smart contract intermediate-level language — to create smart contracts, Zilliqa provides a smart contract language that’s easier to understand and more secure overall, remedying the security vulnerabilities of other common languages.

The platform has demonstrated a lot of promise. Its quick transaction speeds have piqued the interest of many people in the crypto community, and it finally looks like it’s gaining some traction. To incentivize long-term holders, users can stake ZIL on the blockchain for returns. This increases the network’s decentralization and creates additional utility for ZIL. 

Is Zilliqa a Good Investment for the Future?

Given the Ethereum network’s congestion and concomitant high transaction costs, flexible smart contract platforms such as Zilliqa are becoming more appealing. Developers want to rely on a network that can scale as required, with its speed unaffected by high-volume DApps. However, Zilliqa will still need to reach a whole new wave of customers, developers and apps if it’s to thrive. It has yet to achieve its true potential.

However, the network has numerous exciting projects in the pipeline to help it reach its goals. In April 2021, capitalizing on the NFT boom, Zilliqa announced an NFT Greatness Collector Package auction, involving world-famous boxer Terence “Bud” Crawford, with bids starting at $250,000. The package includes luxuries like two round-trip flights to catch upcoming matches, and limited edition autographed boxing gloves.

Another project that has raised eyebrows is Zilstars. It’s a throwback to the traditional baseball cards of yesteryear, featuring an NFT collection that showcases famous soccer players like João Félix and Diego Costa. From exclusive interviews to autographed spikes and gloves, these NFTs are must-owns for fans looking to snag memorabilia of their favorite players.

One of the biggest advantages that Zilliqa has right now is that it doesn’t have any high-profile competitors doing precisely what it’s doing. This means that it can take advantage of the market and continue developing, without worrying about other market players getting in the way.

Zilliqa Price History

Are you curious if Zilliqa is a good investment, given its past track record? Overall, Zilliqa has experienced relatively steady growth since its launch, without any dramatic price drops. Zilliqa reached an all-time high of $0.23 in May 2018. The next six months saw a decline, to around $0.01 in December. ZIL continued to maintain a range between $0.004 and $0.02 for about two years, until its recent bull run in December 2020, climbing to $0.07. Its price at the time of writing is around $0.08, with a market cap of around $1 billion.

Zilliqa Price Predictions

By nature, cryptocurrencies are volatile. Their prices wax and wane with frequency, and it’s not easy to be accurate when it comes to Zilliqa price predictions. Let’s take a look at where some popular analysts predict Zilliqa is headed. in the long run.

Wallet Investor claims the price of ZIL could increase to $1.03 by 2025. CoinsKid believes ZIL’s adoption may grow exponentially by the end of 2025, and predicts ZIL may reach $1.53 by that time.

With an even more bullish trajectory, Coinpedia forecasts the price of ZIL to increase and hit $1 by the end of 2021, due to breakthrough developments and software upgrades, adding that it could reach $4.50 by 2025.

Factors Affecting ZIL’s Price

Investment prospects look good for Zilliqa, particularly when we consider the project’s fundamentals. The framework has seen exponential community expansion, ample liquidity, and technical advancements. Therefore, significant global adoption could well be on the horizon. There have been no significant setbacks thus far (no conceptual flaws in its design, no team disputes or division, no code deficiencies and exploitations, etc.).

Since cryptocurrencies aren’t controlled by a central authority, such as a bank or government, they aren’t influenced by monetary policy, inflation rates or economic development in the way traditional fiat currencies are. There are, however, other factors that may trigger fluctuations in the price of Zilliqa. Make sure to keep all of these in mind before deciding if Zilliqa is a good investment for you.

For instance, the supply of and demand for a particular cryptocurrency have a significant impact on its price. The number of buyers, as well as the places in which the coin is used, are things to examine as well. The number of exchanges where it appears, as well as the liquidity available on such exchanges, plays a role, as many traders are reluctant to sign up for more than one exchange platform. 

The possibility that a cryptocurrency will develop and continuously improve over time can also attract more users, eventually bumping up the price of the coin. Lastly, regulations and laws that determine how a coin is operated, exchanged and circulated are all components that may drive the price of ZIL up or down at any point in time.

The Bottom Line

Is Zilliqa a good investment for the imminent future? Ultimately, we conclude that it’s certainly worth looking into from an investment standpoint. By using sharding as a way to crack one of the biggest problems behind blockchain technology, ZIlliqa makes a compelling case for adoption in a future where decentralization and scalability are key. With experts at its helm, Zilliqa certainly has plenty of potential to grow into an altcoin juggernaut.

Disclaimer

This article is intended for and only to be used for reference purposes only. No such information provided through Bybit constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific person. These forecasts are based on industry trends, circumstances involving clients, and other factors, and they involve risks, variables, and uncertainties. There is no guarantee presented or implied as to the accuracy of specific forecasts, projections, or predictive statements contained herein. Users of this article agree that Bybit does not take responsibility for any of your investment decisions. Please seek professional advice before trading.

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