Zilliqa grew 500% in the last week. Is it undervalued?

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Coinmonks

7 min readApr 1, 2022

*Please note that this article is not financial advice.

Layer 1 smart contract platform Zilliqa’s native token ZIL rose almost 500% in price, from $0.045 to a high of $0.22. The token has since retraced to $0.18. This rapid surge in price is a result of Zilliqa’s announcement of Metapolis, a Metaverse-as-a-Service (MaaS) platform, scheduled to launch with a VIP event on 2 April in Miami.

As of 1 April 2022, Zilliqa has a market cap of about $2.7 billion. For reference to other Metaverse blockchains, Decentraland, The Sandbox and Axie Infinity have market caps of $4.6 billion, $3.8 billion and $3.7 billion respectively.

The relentless waves of good news about Zilliqa has led investors to flock in large waves to purchase the ZIL token. This has resulted in ZIL’s volume becoming the third largest among all cryptocurrencies, behind ETH and BTC. As such, many new investors are still deciding whether Zilliqa is overvalued. Therefore, we will attempt to simply break down Zilliqa and do a comparison with its competitors.

What is Zilliqa?

Zilliqa is a Layer 1 smart contract platform similar to Ethereum, Avalanche, Solana and the like. Its ecosystem includes dApps, DeFi, NFT marketplaces, games and many more. The ZIL token is used to power the network, allowing participants to pay for products and services (NFTs etc.) and pay gas fees for transactions. Zilliqa’s programming language, Scilla, is said to be “secure by design” compared to Ethereum’s Solidity. To reach consensus on transactions and smart contracts, Zilliqa uses a hybrid of Proof-of-Work and Byzantine-Fault-Tolerance mechanism. It also has a staking system to increase the distribution of node operators and increase decentralisation.

Zilliqa is the first ever blockchain to successfully implement sharding, where the blockchain is broken up into smaller chains called “shards”. This allows the blockchain to process multiple transactions in parallel, thus improving the scalability of the blockchain. In fact, Zilliqa can process thousands of transactions per second, compared to Ethereum’s 15. This has led Zilliqa to claim that it has solved the famous “Blockchain Trilemma” of Security, Decentralisation and Scalability. The sharding narrative was what led to Zilliqa’s initial surge in 2017, before other competitors started implementing sharding themselves, pulling investors away from Zilliqa.

However, the development team has not given up on Zilliqa and has consistently pushed out new updates and improvements to the network that coheres with the latest trends. These include DeFi, NFTs and of course, Metapolis. Given these updates, it is clear that Zilliqa still has a lot of room to grow in the long run.

The Zilliqa project was founded in 2017 by a group of researchers from the National University of Singapore. Initial team members included Xinshu Dong, Yaoqi Jia, Amrit Kumar, and Prateek Saxena.

What is Metapolis?

Of course, we have to take a look at the upcoming Metapolis, Zilliqa’s own venture into the rapidly-growing Metaverse. Metapolis aims to be a “metaverse for all”, providing a digital infrastructure and landscape for anyone to build their own virtual universe. This MaaS concept is the first of its kind, allowing Zilliqa to be a pioneer in the flourishing realm of the Metaverse.

The Metapolis has the potential to act as the virtual backdrop to other blockchain ecosystems including NFTs, GameFi and DeFi. According to Aparna Narayanan, head of communications at Zilliqa, “Metapolis will allow conceptually rich and custom-designed domes as part of cities that can house brands, artists, concepts, games, e-stores, real estate or other digital experiences — offering a new layer of engagement for both the physical and digital worlds. Metapolis looks to be self-sustaining and includes engagement layers such as NFTs, e-commerce, play-to-earn, digital mannequins, advertising billboards and more.”

A sneak preview of Metapolis released on Zilliqa’s Twitter account.

This project has huge potential as it allows everyday users to gain access to the Metaverse (Meta Platforms, previously Facebook, is spending billions of dollars in its Metaverse ventures. With Metapolis, the barrier to entry will be way lower). On top of that, this has the potential to bring Zilliqa into direct competition with other popular Metaverse blockchains such as Decentraland, The Sandbox and Axie Infinity. What sets the Metapolis apart is that it provides the tools for users to create their own metaverse (imagine building Axie Infinity inside the Metapolis). Many have dubbed the Metapolis as the new L1 for Metaverse projects. Therefore, it is definitely within reason that the Metapolis can become as big as, if not bigger than the aforementioned Metaverse blockchains.

Metapolis is built on Unreal Engine, Unity and the Nvidia Omniverse. Unreal Engine is used in popular games such as Fortnite, PUBG and Valorant. This means that 3D graphics will be top-notch compared to those of existing Web 3.0 Metaverses (Decentraland doesn’t use Unreal Engine, last I checked). Additionally, Nvidia Omniverse provides the developer ecosystem designed to “make it easier for developers to share assets, sort asset libraries, collaborate and deploy AI”. In short, the graphics will be amazing.

Metapolis secured $2 million in pre-launch revenue from its client pipeline and recently announced a partnership with Agora,a global talent awards app. This partnership allows users to upload content to the Agora app, which will be voted on. Selected content will then be added to the Metapolis.

“We are excited for this partnership as we are able to bring not only creativity to life within the metaverse but also open borderless access for creatives worldwide to connect in the digital world. The partnership between Agora, Zilliqa and Metapolis means we are at the forefront of Web 3 innovation,” said Sandra Helou, head of metaverse and non-fungible tokens at Zilliqa.

Imagine the impact all these will have on the ZIL token. With so much utility, there will be a huge surge of demand for ZIL as new users aim to be a part of this ecosystem.

More will be revealed at the Metapolis VIP launch on 2 April but as of right now, everything looks extremely promising.

The rest of the Zilliqa ecosystem.

While Metapolis has drawn comparisons to top Metaverse projects, Zilliqa is a Layer-1 smart contract platform. As such, there is so much more to the Zilliqa ecosystem. Zilliqa boasts an impressive 2400 participating nodes with 5.6 million addresses (a 560% growth from 2020). For comparison, Solana only has around 1500 nodes and Avalanche has 1357 nodes. While Zilliqa does have more participating nodes, it is still nowhere near the number of wallet addresses its competitors possess (Ethereum has 192 million). Notably, Cardano has around 3.5 million wallet addresses. Zilliqa only has 36000 active addresses, compared to Solana’s 700000 and Avalanche’s 800000. It is apparent that Zilliqa is still not as popular and widely adopted as its peers. However, it also means that Zilliqa has room for future growth to compete with other blockchains.

Zilliqa has many dApps and smart contracts. As of 1 April 2022, Zilliqa’s website boasts an impressive 192 projects running on it. Most notably, XCAD, a project that tokenises Youtuber Creators and has a market cap of $83 million, LunarCrush and so much more. Zilliqa also has its own DeFi landscape and NFT marketplaces. These include Okimoto (a decentralised NFT marketplace) and Zilswap (a fully on-chain, decentralised exchange running on Zilliqa).

Looking at Zilliqa’s DeFi landscape, Zilliqa currently has a TVL value of about $1.1 billion, though that will change as the ZIL token corrects from its recent pump. The total value of ZIL token staked is a little over $1 billion, which represents 31.7% of the total ZIL tokens available. Of course, this is not as impressive as its competitors, such as Cardano’s 73.8% staked (worth $28.35 billion) or Solana’s 75.81% staked (worth almost $50 billion). Therefore, investors do have to take note of these statistics in order to make informed decisions when comparing between Zilliqa and its competitors. These statistics can be found on https://www.zilliqa.com/ecosystem-statistics.

Snapshot of Zilliqa’s ecosystem statistics

All in all, Zilliqa has a functioning and growing ecosystem that has the potential to grow. The point is that Zilliqa is so much more than Metapolis and one should not only focus on the Metapolis as Zilliqa’s only source of value.

Conclusion:

Zilliqa’s recent run due to news of the Metapolis and its partnership with Agora has caught the attention of many who have never heard of the ZIL token before. It stands to reason that the Metapolis has the potential to grow to compete with other Metaverse blockchains such as Decentraland and Sandbox. However, it is important to realise that Zilliqa is different from these blockchains. It is a smart contract platform with an ecosystem that goes beyond the Metapolis. Therefore, it is important to not just compare Zilliqa to the other Metaverse projects based on the Metapolis alone.

Looking at the market cap, Zilliqa currently has a market cap of $2.7 billion, which is set to change depending on how the Metapolis turns out. If the Metapolis turns out to be on par with or better than Sandbox, Decentraland and Axie Infinity, then expect Zilliqa’s market cap to be at least equivalent to those 3. As of right now, it is too early to determine whether Zilliqa’s metaverse can compete with those, but given what has been released so far, we have reason to be hopeful. However, given Zilliqa’s recent run, it is important to be cautious before jumping into a position.

At the end of the day, Zilliqa has solid technology, a great team of developers, a growing ecosystem and huge potential. As such, it is one that will continue to prosper.

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Zilliqa grew 500% in the last week. Is it undervalued?

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Written by CoinMenorah