Zilliqa 2.0's Proof-of-Stake Overhaul: What Changes for Stakers and Validators

Zilliqa is fundamentally reimagining its consensus layer. The transition from Proof-of-Work to a permissionless Proof-of-Stake mechanism with Zilliqa 2.0 represents a watershed moment for the network’s staking ecosystem. This shift will not only reshape validator rewards but also democratize network participation while cutting energy consumption and transaction costs significantly.

The Current Staking Model and Its Limitations

Today’s Zilliqa staking operates through Staked Seed Nodes (SSNs)—a permissioned system where node operators must maintain a minimum 10 million ZIL stake to qualify for rewards. ZIL holders delegate tokens to these SSNs through Zillion, the network’s staking interface at stake.zilliqa.com, earning a proportional share of block rewards.

However, this architecture carries constraints. SSNs function primarily as archive nodes maintaining transaction history and providing API access, rather than actively participating in consensus security. Delegators face a rigid 14-day unbonding period, and the entire system remains gated—the Zilliqa team controls validator eligibility through the SSNList smart contract. Innovative tools like liquid staking (stZIL via Avely Finance) and features such as instant unstaking through Torch Wallet have built around these limitations, but the underlying mechanism remains centralized.

How Zilliqa 2.0 Reimagines Staking

The new system eliminates these bottlenecks by introducing a two-layer, permissionless architecture. Any participant can become a validator by depositing the minimum ZIL stake into a system deposit contract—no team approval required. Validators can optionally deploy delegation contracts to accept delegated ZIL, creating a fluid market for staking services.

The reward structure has been redesigned around network performance. Epoch rewards of 51,000 ZIL per 3,600 blocks are split equally: half goes to validators based on block proposals, the other half to validators ranked among the fastest two-thirds weighted by stake and voting participation. If validators maintain a one-second average block time, they collectively earn the full 51,000 ZIL hourly. Slower block times reduce rewards proportionally—aligning validator incentives directly with network efficiency.

Key Improvements for Stakers and Validators

Decentralization through permissionless entry: Zilliqa 2.0 eliminates gating mechanisms. Anyone staking the minimum ZIL amount participates in consensus security, not just archive operations.

Flexible delegation options: The protocol provides two reference delegation contracts in Solidity: non-liquid staking (manual reward claims) and liquid staking (a non-rebasing token reflecting accrued rewards). This flexibility rivals ecosystem solutions like Zillion’s current offerings while removing dependency on centralized interfaces.

Performance-based incentives: Validators earn proportionally to both their stake and their contribution to network health—blocks proposed and voting speed. This creates natural competition for efficiency.

Slashing and jailing mechanisms: Bad actors face two penalties—slashing stake for safety violations (equivocation) and jailing for liveness failures (missing blocks). This economic security model replaces the current reputation-based approach with cryptographic enforcement.

Migration and Timeline

The unbonding period—originally 14 days on current Zilliqa—carries forward to Zilliqa 2.0 but can be adjusted via decentralized governance. This stability mechanism prevents validators from exiting before penalties are applied.

SSN operators and new validators will need to set up nodes on Zilliqa 2.0 and deposit minimum ZIL to the deposit contract post-mainnet launch. Existing delegators will manually migrate stakes to new staking contracts, facilitated by an upcoming EVM staking portal. The proto-mainnet phase offers a test environment for this migration before mainnet deployment.

What This Means

Zilliqa 2.0’s staking system removes permission gatekeeping while tightening the link between staker rewards and network security. The shift from SSN-based archive funding to PoS-based validator selection represents a genuine decentralization upgrade. For ZIL holders using Zillion or similar staking interfaces, the experience becomes simpler—choosing among permissionless validators rather than pre-approved SSNs. The new paradigm trades centralized efficiency for distributed resilience.