Key Takeaways
Zilliqa is a public Layer 1 blockchain that was among the first to use sharding in production, letting the network process transactions in parallel so throughput can grow as more nodes join.
Zilliqa 2.0 is a major upgrade that moved consensus from the original Proof of Work hybrid model to Proof of Stake and added full Ethereum Virtual Machine (EVM) support.
ZIL is the native token of the network, used to pay transaction fees, to stake with validators, and to interact with decentralized applications.
In July 2026, Zilliqa disclosed a security vulnerability affecting legacy (non-EVM) accounts and paused legacy native transactions. Following this, Zilliqa announced the retirement of its legacy system, and that recovery would entail migration of all users to Zilliqa EVM.
Introduction
Zilliqa is a public Layer 1 blockchain founded in 2017, based on research conducted at the National University of Singapore. It was among the first public blockchains to implement sharding as a scalability mechanism.
The project has since evolved through a major upgrade called Zilliqa 2.0, which changed its consensus model and shifted the strategic focus of the ecosystem. This article explains how Zilliqa works, what makes it different, and what has changed for the network in 2026.
How Does Zilliqa Work?
Sharding and transaction processing
Zilliqa divides its network into smaller groups of nodes called shards. Each shard processes a subset of transactions independently and at the same time, which means overall network throughput can increase as more nodes join. This differs from non-sharded blockchains, where every node must process every transaction, creating a fixed throughput ceiling regardless of network size.
Because sharding spreads the processing load, the network can keep transaction fees low even as activity grows. Fees collected help fund network rewards, which gives validators an economic incentive to keep the network running.
Zilliqa is also designed to reach transaction finality without extra confirmation rounds after a block is validated. This helps the network support high-frequency, low-value transactions such as micro-payments.
Consensus mechanism
The original Zilliqa network used a hybrid model that combined Proof of Work (PoW) for node identity verification with Practical Byzantine Fault Tolerance (pBFT) for block finality. Under Zilliqa 2.0, the network moved to a Proof of Stake (PoS) model, where validators stake ZIL to help validate blocks and earn rewards.
This change lowered the energy requirements of the network compared with the earlier PoW-based approach. A May 2026 mainnet upgrade added more features such as state pruning and RANDAO-based validator selection, aimed at improving performance and security.
What Makes Zilliqa Unique?
Scilla smart contract language
Zilliqa developed its own smart contract language called Scilla, short for Smart Contract Intermediate-Level Language. Scilla is designed with a focus on formal verification, meaning contracts can be analyzed for potential security issues before deployment. This approach aims to reduce the risk of bugs in contracts that handle digital assets.
One consideration for developers is that Scilla differs significantly from Solidity, the language used on Ethereum and most EVM-compatible blockchains. Historically, developers familiar with Solidity had to learn a new language to build natively on Zilliqa, which limited how easily they could onboard.
This is changing. As part of the Zilliqa 2.0 direction, a February 2026 network hard fork added Cancun EVM support. In practice, this means developers can now run Solidity-based contracts on Zilliqa EVM, potentially widening the pool of who can build on the chain.
ZRC token standards and NFTs
Zilliqa supports multiple token standards. ZRC-2 is the fungible token standard, similar in function to ERC-20 on Ethereum, and is used for tokens, stablecoins, and other fungible assets. ZRC-6 is the NFT standard, which supports features such as royalty payments and batch minting.
Together, these standards let a range of digital assets be issued and traded on Zilliqa-powered applications and marketplaces.
ZilSwap and DeFi on Zilliqa
ZilSwap is a decentralized exchange (DEX) native to the Zilliqa ecosystem, where users can trade ZRC-2 tokens and take part in liquidity pools. A bridge tool has allowed users to transfer supported assets between Zilliqa and Ethereum. These tools form part of the broader DeFi infrastructure on the network, though activity levels have shifted as the project has moved through its 2.0 transition and toward EVM.
Zilliqa 2.0
Zilliqa 2.0 is a comprehensive upgrade that represents a significant shift in the project’s direction. The main technical change is the move from the original Proof of Work hybrid consensus to a Proof of Stake model, which reduced energy use and changed how validators take part in the network.
The upgrade also reflects a strategic repositioning, with gaming and Web3 entertainment becoming a primary focus for application development. A central part of the 2.0 roadmap is EVM compatibility, which lets developers deploy Solidity-based contracts on Zilliqa without writing in Scilla. Through 2026, this has moved from a future goal to an active part of the network, with Zilliqa EVM increasingly positioned as the main path forward. Sharding remains a core part of the architecture and continues to serve as the primary scalability mechanism.
Zilliqa Security and the Legacy Network Transition
In July 2026, Zilliqa disclosed a nonce-generation vulnerability in the Ledger app used with legacy (non-EVM) accounts. According to the project, the flaw could allow an attacker to reconstruct a private key from public signatures after roughly five native transactions, and it affected app versions released over several years.
Zilliqa paused legacy native ZIL transactions as a precaution and stated that Zilliqa EVM activity was not affected. The project also said it is retiring the legacy non-EVM side of the network and helping users move to Zilliqa EVM. It noted that legacy balances do not expire and that, at the time of the announcements, a migration tool was still being built rather than released.
For users, the practical takeaway is that it matters whether funds sit on the legacy network or on Zilliqa EVM. Anyone holding ZIL should rely on official Zilliqa channels for current guidance, verify wallet software carefully, and avoid acting on unofficial migration or "claim" pages.
What Is ZIL?
ZIL is the native token of the Zilliqa blockchain. It is used to pay transaction fees, to stake with validator nodes in exchange for rewards, and to interact with decentralized applications built on Zilliqa. ZIL can be traded on major centralized exchanges, including Binance, as well as on decentralized exchanges within the Zilliqa ecosystem.
Staking ZIL
ZIL holders can stake their tokens with validator nodes to help secure the network and earn staking rewards paid in ZIL. Reward rates depend on the total amount of ZIL staked at any given time and are variable rather than fixed. As with any staking activity, rewards are not guaranteed and can change based on network conditions and protocol parameters.
Zilliqa vs. Ethereum
Zilliqa and Ethereum are both Layer 1 blockchains that support smart contracts and decentralized applications, but they differ in architecture and design choices. Zilliqa uses sharding to parallelize transaction processing, while Ethereum uses a single execution layer alongside Layer 2 solutions for scaling. Zilliqa historically used its own Scilla language, and it is now adding EVM support so Solidity contracts can run on the network too. For a broader look at scaling approaches, check out the Academy guide on blockchain Layer 1 vs. Layer 2 scaling solutions.
FAQ
What is Zilliqa (ZIL)?
Zilliqa is a public Layer 1 blockchain that uses sharding to process transactions in parallel, which helps throughput scale with network size. ZIL is its native token, used for transaction fees, staking, and interacting with decentralized applications.
What is Zilliqa 2.0?
Zilliqa 2.0 is a major upgrade that moved the network from its original Proof of Work hybrid consensus to Proof of Stake and added Ethereum Virtual Machine (EVM) compatibility. It also repositioned the ecosystem toward gaming and Web3 entertainment.
Is Zilliqa EVM compatible?
Yes, increasingly so. Throughout 2026, Zilliqa added EVM support, including Cancun EVM features via a February 2026 hard fork. This allows Solidity-based smart contracts to run on Zilliqa EVM, alongside contracts written in its native Scilla language.
What happened to Zilliqa in July 2026?
Zilliqa disclosed a nonce-generation vulnerability affecting legacy (non-EVM) accounts through the Ledger app. It paused legacy native transactions as a precaution, said Zilliqa EVM was not affected, and began retiring the legacy network by helping users migrate to Zilliqa EVM.
What is ZIL used for?
ZIL is used to pay transaction fees on the Zilliqa network, to stake with validators in exchange for rewards, and to interact with decentralized applications. It can be traded on major centralized and decentralized exchanges.
Closing Thoughts
Zilliqa is a Layer 1 blockchain that uses sharding to increase transaction throughput. Its transition to Proof of Stake under the Zilliqa 2.0 upgrade and shift towards Zilliqa EVM show how the chain aims to remain relevant in today’s fast-moving DeFi landscape.