The Zen Protocol
The Zen Protocol (ZP) is a platform designed for the financial markets to allow tokenisation of assets and provide smart contracts for complex financial derivatives. The Zen Protocol team is a group of mathematicians, coders and engineers who want to build the next generation of decentralised finance. The Zen Protocol wants to skip out the middle men and put you back into control of your financial assets, so you can trade at a much lower price.
“Zen Protocol is a trading floor, a broker, and a tool for making new instruments, all on a parallel blockchain that connects to Bitcoin.”
Although, this is still early days. When I contacted them, there is no exchange as yet and they are not working on an exchange although apparently it is in the pipeline. At the moment, they are working with complex financial derivatives and working with VinX to sell wine futures. It’s a vineyard to table trading model to connect producers directly to their future consumers. Whilst Veritaseum is courting Wall Street, Zen Protocol sees these new financial models and derivatives which people have never thought of before as having legs. Although, with the F* language, call options can also be written.
What this means is you could write call options on a tokenised asset in Bitcoin using the Zen smart contract without ever leaving the Bitcoin system. You can read more about ZF* here.
Zen Protocol uses the ZF* programming language, a language created by the ZP team for formally verified smart contracts that gives them many advantages over Ethereum smart contracts. Contracts can also react to events on the Bitcoin blockchain, which means that Bitcoin holders can use Zen’s financial system without third parties or intermediaries. Instead of being a sidechain or new Bitcoin Protocol, Zen’s blockchain runs in parallel to Bitcoin in what is known as Merged Consensus.
ZP miners do not need to run in a virtual machine, unlike Ethereum’s EVM. Unlike other blockchains, Zen simply compiles its smart contracts to machine code, enabling them to run at native speed and greatly increasing transaction throughput.
In other words, ZP’s smart contracts can be more complex at Ethereum’s and run at a faster speed. Sounds perfect for the future or decentralised financial markets where you hold your own assets, right?
Zen Protocol Cross-chain Contract Features
- Decentralized cross-chain exchange/swap: Zen tokens can be held in a smart contract, and released to whoever sends Bitcoins to a certain Bitcoin address.
- Bitcoin crowdsales: Developers can accept Bitcoin in their token sales. All the user needs to do is send BTC to a certain address.
- Contract payments: Alice can write a contract to Bob, and Bob can prove he paid Alice by submitting a proof to the Zen network.
- Collateralized service providers: Bitcoin service providers can use a Zen smart contract to provide users with an effective course if they fail to perform. Collateralization can either substitute, or complement, a traditional risk assessment based on reputation.
The Zen Protocol Coin – ZP Coin
The maximum number of ZP to ever be issued is 100 million, where every ZP is 100m Kalapas, which is the smallest unit, similar to Satoshis for Bitcoin. This results in a total of 10,000,000,000,000,000 or 10 quadrillion Kalapas. That should be enough coins for the financial markets.
Zen Protocol runs on its own blockchain, it is not an ERC-20 token. In fact, the mainnet went live today, Saturday 30th June, 2018!
The initial transaction speed per second (TPS) is between 30 and 60 seconds. The block confirmation time is 4 minutes.
Zen Protocol Fees
Trading fees for using ZP smart contracts:
There are no fixed transaction fees. The default client will add a fee for transactions which activate a contract, but not for other transactions. The team don’t anticipate particularly high fees. Zen Protocol contracts are often even less expensive for nodes to verify than regular “send” transactions.
Activating a contract currently requires a sacrifice of 1 Zen Native Token per kilobyte of contract code per 100,000 blocks.
ZP tokens are faster than Ethereum’s ERC-20 tokens. Here’s why: transactions in Zen are similar in size to Bitcoin transactions, even for tokens other than the Zen Native Token. That’s because all tokens in Zen Protocol are ‘First Class’, which means that they behave the same way, unlike in Ethereum, where ERC-20 transactions are more complex than ETH transactions. Zen can also represent far more complex programs than Ethereum in less space.
So, whilst Ethereum may clean up with dApps such as Cryptokitties, ZP may lead the way for financial innovation with its more complex smart contract capability. Right now, the ZP team need to connect with Wall Street more. Veritaseum currently runs on Ethereum smart contracts. If I was Reggie Middleton, I might be tempted to get in touch with the Zen Protocol team, who seem busy putting the work in rather than getting the marketing out there.
Zen Protocol Scalability
ZP may be truly innovative and allows scaling. Click here to see how ZP stacks up against Ethereum scalability and other blockchain projects.
Issues ZP still needs to solve: it needs a Decentralised Exchange (DEX) or pair up with one, like the upcoming Altcoin DEX; it also needs to pair up with someone to write options or futures contracts; it needs liquidity for the platform; it needs to find a secure custody asset solution, which is currently the scourge of the crypto markets and it could do with pairing up with insurance or hedging companies.
Cryptocurrency & Blockchain Enthusiast | Licenced and Regulated Investment Manager
Cryptocurrency trading is highly speculative. The long term outcome is unknown. Any information contained in articles is for educational purposes only and is not investment advice. Please consult with a financial adviser before making any trading decisions.