The ZILLIQA Technical Whitepaper

1 The ZILLIQAT echnical Whitepaper [Version ]August 10, 2017 The @zilliqaAbstract Existing cryptocurrencies and smart contract plat-forms are known to have scalability issues, , the number oftransactions they are capable of processing per second is limited,usually less than 10. As the number of applications utilizingpublic cryptocurrencies and smart contract platforms grow, thedemand for processing high transaction rates in the order ofhundreds and thousands of Tx/s is this work, we presentZILLIQA a new blockchain platformthat is designed to scale in transaction rates. As the number ofminers inZILLIQA increases, its transaction rates are expected toincrease.

2 At Ethereum s present network size of 30,000 miners, ZILLIQA would expect to process about a thousand times thetransaction rates of Ethereum. The cornerstone inZILLIQA sdesign is the idea ofsharding dividing the mining networkinto smaller shards each capable of processing transactions proposes an innovative special-purpose smartcontract language and execution environment that leverages theunderlying architecture to provide a large scale and highlyefficient computation platform. The smart contract language inZILLIQA follows adataflow programmingstyle which makes itideal for running large-scale computations that can be easilyparallelized.

3 Examples include simple computations such assearch, sort and linear algebra computations, to more complexcomputations such as training neural nets, data mining, financialmodeling, scientific computing and in general any INTRODUCTIONC ryptocurrencies and smart contract platforms are becom-ing a shared computational resource. One could view theseplatforms as a new generation of computers that synchronizeover thousands of individual computers. However, existingcryptocurrencies and smart contract platforms have widelyrecognized limitations in scaling. Average transaction rates inBitcoin [1], Ethereum [2], and related cryptocurrencies havebeen limited to below 10 (usually about 3-7) transactionsper second (Tx/s).

4 As the number of applications utilizingpublic cryptocurrencies and smart contract platforms grow, thedemand for processing high transaction rates in the order ofhundreds of Tx/s is increasing. A global payment networkwould likely require tens of thousands of Tx/s in we build a decentralized and open blockchain platformcapable of processing at that scale?The limitations in scaling up existing protocols are some-what fundamental they are rooted in the design of theconsensus and network protocols. Therefore, even though re-engineering the parameters of the existing protocols in sayBitcoin or Ethereum ( , the block size or the block rate)may show some speedup, to support applications that needprocessing of thousands of Tx/s however requires rethinkingthe underlying protocols from present ZILLIQA a new blockchain platform that isdesigned to scale in transaction rates.

5 As the number of minersin ZILLIQA increases, its transaction rates are expected toincrease as well. Specifically, ZILLIQA s design allows itstransaction rates to roughly double with every few hundrednodes added to its network. As of this writing, the Ethereummining network is over 30,000 nodes. At Ethereum s presentcapacity, ZILLIQA would expect to process about a thousandtimes the transaction rates of a redesign from scratch and has been underresearch and development for over 2 years. The cornerstonein ZILLIQA s design is the idea ofsharding dividing themining network into smaller consensus groups calledshardseach capable of processing transactions in parallel.

6 If themining network of ZILLIQAis 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 transactionsin one time epoch, then 10 sub-networks can agree on a totalof 1000 transactions in aggregate. The key to aggregatingsecurely is to ensure that sub-networks process different trans-actions (with no overlaps) without assumptions are similar to existing blockchain-basedsolutions. We assume that the mining network will have a frac-tion of malicious nodes/identities with a total computationalpower that is a fraction (<1/4) of the complete is based on a standard proof-of-work scheme, however, ithas a new two-layer blockchain structure.

7 It features a highlyoptimized consensus algorithm for processing comes with an innovative special-purposesmart contract language and execution environment that lever-age the underlying architecture to provide a large scale andhighly efficient computation platform. The smart contractlanguage in ZILLIQA follows a dataflow programming style,where the smart contract can be represented as a directedgraph. Nodes in the graph are operations or functions, while1an arc between two nodes represent the output of the first andthe input to the second. A node gets activated (or operational)as soon as all of its inputs become valid and thus a dataflowcontract is inherently parallel and suitable for decentralizedsystems such as sharded architecture is ideal for running large-scalecomputations that can be easily parallelized.

8 Examples includesimple computations such as search, sort and linear algebracomputations, to more complex computations such as train-ing a neural net, data mining, financial modeling, scientificcomputing and in general any MapReduce task among document outlines the Technical design of ZILLIQA blockchain protocol. ZILLIQAhas a new, conceptually cleanand modular design. It has six layers: the cryptographic layer(Section III), data layer (Section IV), the network layer (Sec-tion V), the consensus layer (Section VI), the smart contractlayer (Section VII) and the incentive layer (Section VIII).Before we present the different layers, we first discuss thesystem settings, underlying assumptions and threat modelin Section SYSTEMSETTING ANDASSUMPTIONSE ntities are two main entities inZILLIQA:usersandminers.

9 Auseris an external entitywho uses ZILLIQA s infrastructure to transfer funds or runsmart the nodes in the network whorun ZILLIQA s consensus protocol and get rewarded for theirservice. In the rest of this Whitepaper , we interchangeably usethe terms miner and s mining network is further divided into severalsmaller networks referred to as ashard. A miner is assignedto a shard by a set of miners calledDS nodes. This set of DSnodes is also referred to as theDS committee. Each shard andthe DS committee has aleader. The leaders play an importantrole in the ZILLIQA s consensus protocol and for the overallfunctioning of the user has a public, private key pair for a digital signa-ture scheme and each miner in the network has an associatedIP address and a public key that serves as an an intrinsic token calledZillingsor ZILs for short.

10 Zillings give platform usage rightsto the users in terms of using it to pay for transactionprocessing or run smart contracts. Throughout this Whitepaper ,any reference to amount, value, balance or payment, shouldbe assumed to be counted in assume that the mining networkatany point of timehas a fraction of byzantine nodes/identitieswith a total computational power that is at mostf <n4of thecomplete network, where0 f <1andnis the total sizeof the network. The factor14is an arbitrary constant boundedaway from13selected as such to yield reasonable constantparameters. We further assume that honest nodes are reliableduring protocol runs, and failed or disconnected nodes arecounted in the byzantine nodes can deviate from the protocol, drop ormodify messages and send different messages to honest , all byzantine nodes can collude together.