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1 May 6, 2018 ZIL Rating Report

TokenInsight Global Token Data & Rating Agency

Global Token Data & Rating Agency

Project Zilliqa

Rating BB

Outlook Short-Term Stable

Label

Platform, DAPP,

Smart Contract

Date May 6, 2018

PRICE（USD） 0. 147

MKT. CAP（USD） 1,074 million

MKT. CAP. RANK 28

Contents

Industry Analysis………….....……………………….3

Technology Analysis…………………..…………….5

Economic Model……………………..……………….7

Token Distribution and Funds Usage……….9

Team Strength………………………………………..10

Popularity Analysis…………………………………11

Project Schedule…………………………………….13

Qing Liu [email protected]

Henry Shi [email protected]

tokenin.io

The rating of ZIL is BB. Currently, the project is in the risky early stages of

development, and there is great uncertainty about future development.

ZIL designs the system centered on cutting-edge sharding technology. ZIL

aims solve two major challenges of the current general platform projects:

scalability and security. But the complex combination of technologies has

increased the difficulty of releasing ZIL. At present, the project schedule has

been delayed for nearly three months.

The ZIL team has a strong technical background. This project has numerous

partners assisting with the launching of the project and ecological

construction post-launch However, general platform projects encounter

numerous competitors. Compared with ETH, EOS and other projects, ZIL has

fallen far behind in ecological construction areas such as community

operation and development.

ZIL has a better incentive mechanism design but lacks the essential

governance mechanism the design, which is likely to increase risks of in the

late stage of the project. As with most of the current token projects, the

opaque use of funds will add unnecessary risks for investors. In addition, if

the appreciation expectations of ZIL tokens are not met, the holders of

existing tokens will face three years of depreciation pressure.

In the short term, the rating of ZIL is expected to be stable in view of the

complexity of the application of sharding technology in ZIL and the

adjustment of the original project schedule.

mailto:[email protected]




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Committee Members) and the subject of this rating which would affect the objectivity, independence, and impartiality of

the rating.

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3. This report is an independent judgment made by TokenInsight Inc. in compliance with applicable laws, regulations and

reasonable internal credit rating processes and standards, and there are no changes in rating opinion due to improper

influence of the rating target or any other organization or individual.

4. All information contained herein is obtained by TokenInsight Inc. from sources believed by it to be accurate and reliable.

Because of the possibility of human or mechanical errors as well as other factors, however all information contained herein

is provided “AS IS” without warranty of any kind. TokenInsight Inc. checks verifies, as necessary, the authenticity, accuracy,

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for any commercial purpose.

5. The inclusion of a credit rating or secondary market price analysis in this rating report should and can only be interpreted

as an opinion and not as a statement of fact or a recommendation to purchase, sell or hold any token.

6. The risk ratings indicated in this rating report are valid from the date of issuance of this report until the date of the next

adjustment; at the same time, TokenInsight Inc. will periodically or irregularly track the ratings of the rating recipient to

determine whether to adjust the credit ratings or not, and will publish them in a timely manner.



Industry Analysis

Exhibit 1 Global Token Market Capitalization Trend

Source: Coin.dance

Blockchain technology was first introduced in the Bitcoin whitepaper in November 2008 and has now been adopted by more and

more traditional technology companies and startup teams. On December 16, 2017, the capitalization of Bitcoin reached USD

330,947 million, a peak of the past. Since then, Bitcoin’s market cap has fallen sharply. While in stark contrast of this, the total

market cap of Altcoin tokens began to increase rapidly and showed a strong overtake on December 19, 2017. On January 6, 2018,

the total market cap of Altcoin tokens reached USD 508,680 million, a peak in the past six months. However, it declined sharply in

the following three to four months, but rapidly recovered in the past month.



Exhibit 2 TI & TIG Index Trend in the Past Two Weeks

Source: TokenInsight

According to the data of TokenInsight, in the past two weeks, from April 20 to May 4, TI index, reflecting the overall performance

of global token market, increased about 18.5%. TIG index, reflecting general platform (market cap accounts for approximately 30%

of global token market) token market performance increased up to 27.7%, while the payment currency (about 60% of the global

token market) represented by Bitcoin (accounting for 34.8% of the global token market) rose by approximately 16.6%. This shows

that the general platform market has dominated the overall rise of the recent global token market.

Exhibit 3 Market Capitalization Percentage of Industries and Projects (May 4, 2018)

Source: TokenInsight



Currently, according to TokenInsight's statistics, among the top 20 token projects in terms of market cap now, 10 projects are the

general platform category, and they are ETH, EOS, ADA, NEO, XEM, VEN, ETC, QTUM, Qtum, and ICX. ETH (accounting for 59% of

the total market cap of this category) ranks the highest among the top 10 general platform projects by market cap, followed by

EOS (accounting for 11%) and Cardano (accounting for 7%). ZIL accounts for approximately 1% of the total market cap of general

platform projects.

Exhibit 4 Share of ZIL Exchange Market (May 4, 2018)

Source: Coinmarketcap

Up to May 4, 2018, ZIL has been listed on a number of token exchanges with market cap of about USD 1,000 million and 24 hours

volume of around USD 60 million. The 24 hours volume mainly focuses on Binance, Huobi, Gate.io and OOOBTC exchange,

respectively accounting for about 55.9%, 32.2%, 7.6% and 1.4%. The transaction form is mainly based on BTC, ETH, USDT, etc.

Technology Analysis

The development of the token economy cannot be separated from the development of blockchain technology. However, large-

scale application of blockchain technology has not yet been formed. Currently, it is mainly limited by the technical constraints of

the blockchain infrastructure. Ethereum, as the first general platform for smart contract, is also a general platform with the most

DAPPs. Even though Ethereum greatly facilitates the development of blockchain applications, it still has obvious problems such as

insufficient processing capacity (20 times per second), high transaction fees (up to about 5 dollars for a single transaction), and



security vulnerabilities of smart contract and low resource utilization, which have affected the development of applications in

platform. The current token market urgently requires a major breakthrough in the underlying technology of the blockchain, and

then emerging a general platform project with large-scale business applications.

Exhibit 5 Comparison of Main Parameters of Some General Platform Projects

Time of Mainnet

Release (estimated)

Consensus Block Time

(s)

TPS Technical Features

ZIL Q3, 2018 POW, BFT N/A AWS 2,088 measured;

VISA Class expected

smart contract,

sharding

ETH July. 2015 POW to POS 20 20 measured; Raiden Network in the

future (millions)

virtual machine, smart

contract, sharding

EOS June. 2018 BFT-DPOS 1 average value of single blockchain is

3,000;

1,000,000 expected

21 supernodes, cross-

chain interaction

ADA Sept. 2017 Ouroboros 20 10 measured;

257 expected

layered architecture

NEO Oct. 2016 DBFT 20 1,000 measured;

10,000 expected

digital certificate,

smart contract, cross-

chain interaction

QTUM Sept. 2017 POS 120 70 measured; Lightening Network in

the future (millions)

UTXO model,

virtual machine

LSK Aug. 2016 DPOS 10 2.5 measured;

100,000 expected

101main nodes,

side-chain

ARDR Jan. 2018 POS 60 100 measured;

N/A

main chain, sub chain

AE Q2, 2018 POW+POS 30 N/A; 32 expected state channel,

prediction machine

Source: Official Source, TokenInsight

Some of the existing general platform projects will improve scalability through the adoption of new technologies. For example,

EOS will add BFT (Byzantine Fault Tolerance) to DPOS (Delegated Prove of Stake) consensus mechanism, which enables consensus

to be reached within one second. Besides, EOS adopts 21 supernodes and cross-chain technology to reach TPS (Transaction per

Second) with millions per second. But this may presents problem of high degree of centralization; LSK has adopted side chain

technology to separate the mainnet to solve the scalability problem, and it has designed 101 main nodes to improve the degree

of decentralization. But the side chain technology will also bring new security issues.

Scalability is one of the prerequisites for building a large-scale distributed application. There have been many solutions to improve

processing performance, among which sharding is widely recognized by the whole industry. At present, ZIL is one of the first



projects to adopt sharding to solve scalability problem. In addition to improving processing performance, it also focuses on the

guarantee and enhancement of security. In order to solve the scalability and security issues commonly faced by existing general

platforms, the ZIL team will make improvements and innovations in the underlying blockchain, core algorithms, and smart contract

design. Around the core sharding technology innovation, the ZIL project has been carefully designed from four aspects: First, ZIL

adopts the network sharding technology to improve processing capabilities and it designs POW certification protection; Second,

ZIL designs the BFT consensus algorithm based on POW to reduce the recognition rate and it enhances CoSi agreement to

guarantee the Scalability; Third, ZIL improves the account security on the basis of its design and it adopts "reject-and-retry"

mechanism to ensure the processing capacity; Fourth, ZIL adopts the force of sharding technology to improve resource utilization

and it designs smart contract language of data stream to improve application performance and security.

The ZIL project introduces cutting-edge academic achievements in the blockchain system. It attempts to improve decentralization

while improving security and scalability to achieve true sharding of nodes. However, the difficulty of implementing such complex

technologies also inevitably increase exponentially.

Economic Model

Exhibit 6 ZIL Token Allocation

Source: Official Source

Currently, market circulating supply of ZIL token has reached 7.28 billion. Its maximum supply is 21 billion and the total issued

amount is limited to 12.6 billion. Among them, 6.3 billion tokens (50% of the total issued amount) will be lifted in quarters within

three years including: 2.1 billion tokens allocated to Anquan Capital, which supports the Zilliqa project (accounting for



approximately 16.7% of the total issued amount), 650 million tokens allocated to Bitcoin and Suisse companies (5% of the total

issued amount), two companies that provide crowdfunding services, and 3.57 billion tokens distributed to the Zilliqa research

group and the Zilliqa development team (accounting for 28.3% of the total issued amount). In addition, the remaining 6.3 bill ion

tokens are allocated to early community contributors by ICO.

After launching the main network, ZIL team plans to use the method of mining incentives for issuing additional tokens. In the next

10 years, a total of 8.4 billion additional tokens will be issued, accounting for 66.7% of the total issued amount. This is similar to

the total amount design of ETH, which can attract a large number of miners to participate in the ecological construction during

the project period. This is also the special needs of ZIL project to exploit the advantages of sharding technology. However, the

higher mining speed of issuing in the early stage, coupled with the liquidity shock caused by the gradual lifting of the 6.3 billion

tokens within three years, if not digested by the appreciation of the project itself, will bring the token holders much "inflation

pressure".

Compared with the current transaction fees of ETH, every designing transaction fee of ZIL is relatively low (0.0005 - 0.0025 USD

expected). When the processing speed reaches more than 200 tps, transaction fees tend to be stable, and will not increase

substantially with the rise in transaction volume later. But compared to the non-consumption, leasable resource utilization design

of EOS, ZIL's resource utilization efficiency is slightly lower. In terms of governance mechanism design, ZIL is similar to ETH, both

of which has no design for account freezing or constitutional change (which are used by EOS). If there is a major update or technical

iteration later in ZIL, there will be a greater risk of hard fork.

Exhibit 7 Comparison of Incentive Mechanisms in ZIL, EOS and ETH

ZIL EOS ETH

Block

Producers’

Incentive

40% of reservation for mining incentive (the total

amount is limited to 21 billion, and 8.4 billion

tokens for mining incentive in ten years), operating

cost for a single nod is about one tenth of ETH

node; miners can pack many blockchain

simultaneously and obtain stable earnings

No more than 5% annual increase,

with 1% (according to officials) used

to reward super nodes, and a portion

used to reward successful proposals

A partial return on

mining, limited to a

total of 100 million

(currently 99.3 million

supplies)

User Incentive

Each transaction costs ZILs, and is affected by ZIL

price; each transaction cost is low(0.0005 - 0.0025

USD expected), and not increase substantially with

the rise in transaction volume (When the

processing speed reaches more than 200 tps,

transaction costs tend to be stable)

Platform users hold bandwidth

resources in proportion to tokens and

are not affected by EOS price; idle

bandwidth resources can be leased or

sublet; DAPP users have no direct

usage charges

Each transaction costs

Gas, and is affected

by ETH price

Community

Governance

Mechanisms

None Account freezing, code changes,

constitutional changes, etc.

None

Source: Official Source, TokenInsight



Token Distribution and Funds Usage

Exhibit 8 Comparison of Market and ICO Price of ZIL

Source: Etherscan

ICO date for ZIL project is from December 27, 2017 to January 4, 2018. According to Bitcoin Suisse, ZIL has obtained ETH valuing

USD 22 million (at that time the market price was around 700 USD per ETH) by ICO with ICO price of 0.0000085 ETH/ZIL (about

0.006 USD). The current market price for ZIL is around 0.00016 ETH/ZIL, approximately 1800% of ICO price (estimated by ETH).

Exhibit 9 Distribution of ZIL Token Holders’ Addresses (May 4, 2018)

Rank Address Quantity (token) Percentage

1 0xde5a57b9ba909c332cb7be7133ec29e228fb0286 5,315,701,813.76 42.19%

2 0xfe9e8709d3215310075d67e3ed32a380ccf451c8 863,529,847.91 6.85%

3 0x5d86867b340f605f5c2713ae9d021db426bc15e7 425,000,000.00 3.37%

4 0xbcc38f4f6c31625ad6171525d683a811c9cfb98d 217,494,494.00 1.73%

5 0x46705dfff24256421a05d056c29e81bdc09723b8 208,363,362.68 1.65%

6 0x1f8978b550c0291627d5604a84e76fc044c23fb5 161,977,050.40 1.29%

7 0x6748f50f686bfbca6fe8ad62b22228b87f31ff2b 161,553,863.12 1.28%

8 0x187aabe294cbdebb6c9904422e21955974198ee4 131,515,173.00 1.04%

9 0xadb2b42f6bd96f5c65920b9ac88619dce4166f94 123,689,641.83 0.98%

10 0xeb68aa2764b4a9a943658b2e61db4c902b2ebf85 120,044,689.64 0.95%

Sum 7,728,869,936.35 61.34%

Source: Etherscan

At present, ZIL token stores the account data in the form of ERC20. The sum of its top ten addresses exceeds 60%, which is relatively



concentrated. Among them, the amounts of token held of the top three addresses are more than 3% and the sum of the three

holding percentage is 52.4%. Other holding addresses are less than 2%. It should be noted that since ETH's ERC20 contract still has

a certain risk of code loopholes, the security problem of ZIL's token accounts cannot be ignored.

Exhibit 10 ICO Fund Usage Plan for ZIL


ZIL team released its USD 22 million funds usage plans in the community forum after ICO, planning to use 15% as remuneration

for Anquan Capital who provides technical support, 5% as ZIL founding team's compensation, and the remaining 80% for the next

three years ZIL project research, development and operation. Among them, about USD 5.4 million of funds will be used for the

underlying development of the ZIL project, and USD 3 million will be used for the research of the underlying issues such as

blockchain scalability and security. It is worth noting that the ZIL project is registered in Singapore. At present, no specific details

of the use of funds have been released. So it will bring investors certain risks in terms of the use of funds.

Team Strength

According to official sources, ZIL team has a strong technical background. The ZIL project was incubated by Anquan Capital, which

developed the core technology of blockchain scalability. It has opened relevant intellectual property to the ZIL project. Prateek

Saxena and Loi Luu, ZIL project consultants, presented the sharding technology the first time in a co-authored paper. Prateek

Saxena is also a partner of Anquan Capital. In addition, the CEO and chief technical leader of the ZIL project have accumulated rich

experiences in academic research and related technology.



According to the statistics of Crunchbase, investors in the ZIL project include FBG Capital (Private Transfer) and Node Capital (ICO).

In addition to some investors, and according to its website, its partners also include investment companies (such as 8 Decimal

Capital, DHVC, and GB global Brain), consulting companies (such as One Block Capital Advisory and Signum Capital), financial

service companies (such as Bitcoin Suisse and Talenta), and legal companies (Linklaters). Besides, the ZIL project has entered into

a partnership with the global advertising giant Mindshare, which will contribute to the construction of its application ecology.

Exhibit 11 Main Investors and Partners of ZIL

Institutions Features of Institution

Anquan Capital deep scientific research(its technology engines power high throughput, high security applications to enterprises

and their customers)

FBG Capital a digital asset management firm

Node Capital a venture capital company focusing on blockchain industry

8 Decimal Capital a decentralized buy-and-build blockchain technology Venture Capital firm

DHVC a VC fund that invests primarily in early stage and growth stage company

1kx blockchain angel fund

GB global Brain venture capital

Metachain Capital blockchain industry venture capital company

Hyperchain Capital a digital assets hedge fund focused on blockchain

Polychain Capital a VC fund that takes advantage of a growing trend among blockchain startups

Kenetic Capital a blockchain firm committed to expanding the development and adoption of blockchain platforms

One Block Capital

Advisory

a privately-funded blockchain investment & advisory group

Signum Capital a Singapore-based firm that exclusively consults in Blockchain-enabled companies

Talenta a professional management consulting company that provides one-stop solution to blockchain projects and

crowdfunding campaigns

Bitcoin Suisse Swiss-based financial services provider specializing in crypto-assets

Linklaters a multinational law firm

Mindshare a world-leading advertising agency

Source: Crunchbase, Official Source

Popularity Analysis



Exhibit 12 Google Trends Comparison of ETH token, EOS token and ZIL token

Source: Google Trend

Exhibit 13 Comparison of Github Contributors and Commits of ETH, EOS and ZIL

Up to May 4 Past 7 days Past 30 days Past 90 days

Contributors Commits Commits Commits

Zilliqa 14 7 169 817

EOS 101 12 269 1,629

Ethereum 259 32 90 309

Source: Github, TokenInsight



Compared google trend of ETH token, EOS token and ZIL token, the google search of ZIL token has been significantly increased

since January, 2018. But in recent three months, it is less than 10% of ETH token. The number of people in the ZIL official telegram

group of ZIL is 26,264 (50,200 in the ETH official telegram group and 49,595 in the EOS official telegram group). There has been a

lot of discussion about ZIL in the group and the community has a higher degree of activity.

In January, 2018, ZIL team released open source code at https://github.com/Zilliqa/zilliqa. Currently, Zilliqa, the open source code

of the ZIL project, has released three versions and the latest version is Durian release v1.01. As of May 4, the number of contributors

to the ZIL open source code Zilliqa is 14, which is quite different from the EOS (earlier project launch) open source code eos-

platform (101). In the past 30 days and 90 days, Zilliqa's code commissions were 169 and 817 respectively, which was about twice

as many as the number of Ethereum, ETH’s (relatively mature project) open source code. But the number of code commissions in

the past 7 days was significantly less than that of the latter. This shows that Zilliqa's code activity was relatively high in the last three

months, but it decreased significantly in the past week.

Project Schedule

Although the project has not yet been finalized, the ZIL team will publicize the development progress of the project through Github

and the official website community. Recently, the ZIL team will announce the first version of the smart contract language Scilla,

which is designed as a user-friendly parallel computing language that can be used to coordinate computational allocation,

communication, and security between shards.

Sharding technology has become the biggest selling point of the ZIL project. There are currently two internal test results and one

public beta version. In October 2017, ZIL released the latest closed beta results in the AWS environment: With 3,600 nodes and 6

shards, the number of transactions processed per second reached 2,488. However, the test data in the AWS environment is the

result of a relatively closed environment, which is very different from the actual application environment. The test v1.0 was originally

planned to be launched in December 2017 (according to the Roadmap of ZIL’s position paper). But ZIL successfully tested this on-

line version at the end of March 2018. And its test v2.0 will be launched and tested in the second quarter of 2018, according to

ZIL’s Schedule Roadmap published in the early days of the project.

Currently, the public test version has undergone stress testing for 1,000 nodes and the transaction throughput has reached to

2,000 per second. Although the test version has the functions of a wallet and a block browser, it still cannot achieve the function

of mining. A detailed comparison of the original plan progress with the existing accomplishments shows that some of the key

functions of the ZIL project have not yet been realized (such as smart contracts, GPU-supported mining). Due to the difficulty of

achieving a secure and scaled technological innovation, the project still has a certain risk of delay.



Exhibit 14 ZIL Schedule Roadmap


Original planned phase 1: Internal test version v0.1, development completed in Sept, 2017

Completion of cryptographic primitive building of POW and consensus mechanism. Implementation of network sharding

and data exchange.

Actual progress: Completed on time

Original planned phase 2: Internal test version v0.5, development, completed in Oct, 2017

Completion of the construction of transaction sharding and processing. Achieving persistent storage.

Actual progress: Completed on time

Original planned phase 3: Releasing design documentation on smart contract language design and framework, completed

in Nov, 2017

Actual progress: Announced design documents in Dec, 2017

Original planned phase 4: Releasing test version v1.0 and related source code, completed in Dec, 2017

Implementing the joining function of new nodes. Completion of the development of mining software and wallet software.

Performance optimization.

Actual progress: The source code was announced in January 2018. The public test version was completed at the end of

March 2018. The node running and wallet software has been implemented, but the mining function has not been realized.

Original planned phase 5：Releasing test version v1.5, completed in the first quarter of 2018

Improvement of the stability of system, support for basic features of smart contract and performance optimizations

Actual progress: Planning to complete test version v2.0 in the second quarter of 2018

Original planned phase 6: releasing main network in the second quarter of 2018

Realization of the computational sharding of smart contract.

Actual progress: Planning to complete in the third quarter of 2018

Original planned phase 7: releasing DAPPs in the third quarter of 2018

Actual progress: Planning to complete in the fourth quarter of 2018



Appendix 1: Symbols and Definition of Risk Ratings

Rating description

AAA The project has been tested by the market, with extremely strong security, and the influence of uncertain external

factors on the development of the project is minimal.

AA The project has obtained market approval, with strong security, and its development is normal and orderly. Some

uncertain external factors have little influence on the development of the project.

A The project is recognized by the market in the short term and has strong security, but its future development is

susceptible to internal and external uncertainty factors.

BBB The project is generally qualified, susceptible to external factors and prone to large fluctuations.

BB The project is poorly qualified, with some risks, and there is great uncertainty about the future development.

B The project is extremely poorly qualified, riskier and cannot be developed with its own capabilities.

CCC The value of the project is very low and the company/team has many bad records.

CC The value of the project is extremely low and the company/team has many bad records.

C The project is largely worthless and the company/team has a large number of bad records.

D The project is worthless.



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