Zilliqa (ZIL): the crypto industry's first platform with sharding technology

The developers of Zilliqa created this platform specifically to address Ethereum's main drawbacks: problems with scalability and low throughput.

What is Zilliqa?

Zilliqa is a blockchain platform built on the advanced PBFT consensus algorithm to improve throughput and transaction processing efficiency.

The Zilliqa platform was developed by a team from the National University of Singapore; the core network (main net) was launched in January 2019. A few months after launch, Zilliqa's native cryptocurrency, ZIL, was among the top 30 most significant digital assets by market capitalization, exceeding $1.2 billion.

How does the Zilliqa blockchain work, and what are its features?

The Zilliqa blockchain was one of the first decentralized protocols, its architecture based on the consensus mechanism Practical Byzantine Fault Tolerance or PBFT.

The practical Byzantine Fault Tolerance mechanism is a special Byzantine Fault Tolerance (BFT) algorithm. In essence, PBFT is an optimized version of the BFT algorithm that addresses several limitations that prevent the use of this technology in blockchain networks, such as:

• Scaling issues;
• The presence of direct communication between validator nodes, which is unacceptable for creating large decentralized networks;
• The possibility of nodes suddenly shutting down is closely related to the previous problem.

The PFBT algorithm is optimized for developing large blockchain networks like Zilliqa in such a way that it allows one to determine the order of communication between primary and backup nodes. The consensus process between nodes is divided into several steps:

1. The master validator proposes a block to add it to the network;
2. The other nodes examine the block and inform the master validator that it has been validated and approved for publication on the blockchain.

At the same time, the master node changes at each block validation cycle and cannot be predetermined in advance, which provides additional security to the network. However, at the same time, the PBFT mechanism is susceptible to Sybil attacks, where a single user or group colludes to control the majority of nodes in the network. However, the more nodes in a blockchain network, the more difficult it is to conduct a Sybil attack. According to the March 2025 ZilScan Observer, there are 600 validator nodes in the Zilliqa blockchain network, making it very difficult to conduct a Sybil attack.

Zilliqa was also the first blockchain project to implement sharding technology, which was revolutionary. In 2022, sharding technology was introduced to the Ethereum blockchain as part of The Merge, the most significant update in the platform's history.

Sharding technology allows the blockchain to be divided into segments (shards) that can process transactions in parallel and reduce execution latency. This has become one of the most effective solutions to the scalability problem of decentralized networks, which are also called segmented networks.

As the number of segments grows, so will the transaction processing speed (TPS) in sharding-based blockchain networks. According to the developers, the Zilliqa network can process about 2,500 transactions per second.

Zilliqa token

The main asset used to pay fees is the native ZIL utility token. The ZIL token was initially issued in ERC-20 format on the Ethereum blockchain and listed on exchanges in January 2018 — a year before the launch of the Zilliqa core network.

After the launch of the Zilliqa core network, it became possible to move tokens from the Ethereum blockchain to its ecosystem. The ZIL token is also a BEP-20 token in the BNB Smart Chain blockchain.

The Zilliqa token has other functions besides paying network fees, such as:

• Payments of rewards to Zilliqa network validators;
• Payments for products and services within its ecosystem;
• Buying and selling non-fungible tokens (NFTs) through specialized decentralized marketplaces;
• Providing liquidity in DeFi protocols.

As of March 2025, with a market capitalization of $242 million, the value of the Zilliqa cryptocurrency is $0.012, which is 95% below the all-time high (ATH) reached in May 2021 at $0.25, data from monitoring service CoinMarketCap (CMC) shows.

Currently, 19.6 billion ZIL tokens are circulating out of the 21 billion maximum possible. Once the limit is reached, Zilliqa tokens will stop being released to the market.

Conclusion

Although Zilliqa attracted considerable investor attention in the first years after its launch and was among the leading blockchain projects, the platform has now significantly lost ground to new protocols.

In May 2021, at the peak of the cryptocurrency bull run, the total blockchain value (TVL) of all DeFi protocols in the Zilliqa ecosystem, according to the DeFi Llama service, reached nearly $240 million. However, as early as March 2025, it is less than $1 million — about 260 times lower than its peak value — indicating a severely diminished interest in the Zilliqa ecosystem amid the growth of competitive platforms such as Ethereum, Solana, BNB Smart Chain, TON, Base and many others.

Nevertheless, according to the CMC service for March 2025, the native token of the ZIL platform is 166th in the overall ranking of cryptocurrencies in terms of market capitalization.