The frustrated magnet $alpha$-RuCl$_3$ constitutes a fascinating quantum material platform that harbors the intriguing Kitaev physics. However, a consensus on its intricate spin interactions and field-induced quantum phases has not been reached yet. Here we exploit multiple state-of-the-art many-body methods and determine the microscopic spin model that quantitatively explains major observations in $alpha$-RuCl$_3$, including the zigzag order, double-peak specific heat, magnetic anisotropy, and the characteristic M-star dynamical spin structure, etc. According to our model simulations, the in-plane field drives the system into the polarized phase at about 7 T and a thermal fractionalization occurs at finite temperature, reconciling observations in different experiments. Under out-of-plane fields, the zigzag order is suppressed at 35 T, above which, and below a polarization field of 100 T level, there emerges a field-induced quantum spin liquid. The fractional entropy and algebraic low-temperature specific heat unveil the nature of a gapless spin liquid, which can be explored in high-field measurements on $alpha$-RuCl$_3$.
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