What is the charm of Layerzero, a supernova in the cross-chain industry with a valuation of $3 billion?
Project Introduction
LayerZero is a trustless full-chain interoperability protocol and a communication platform between blockchains. It is designed for lightweight cross-chain information transmission and provides real and guaranteed message delivery through configurable de-trust. LayerZero provides a powerful underlying communication network structure on which a variety of cross-chain application sets can be built, breaking the isolation of blockchains from each other. For developers, LayerZero can achieve seamless linking of applications, eliminate barriers between different blockchains, and achieve efficient and accurate information exchange. For users, it allows transactions to be conducted between different chains, improving liquidity.
team introduction
Bryan Pellegrino is the Co-Founder and CEO of LayerZero Labs. He has also served as Entrepreneur in Residence, Lead Engineer at Machine Learning Architecture, and Co-Founder of OpenToken. Bryan graduated from the University of New Hampshire in 2008 with a degree in Computer Science. Ryan Zarick is the Co-Founder and CTO of LayerZero Labs, a company based in Vancouver, British Columbia, Canada that is building Layer 0 of the blockchain. Ryan is an experienced software developer and entrepreneur with over 10 years of experience in the tech industry. He co-founded Minimal AI, Coder Den, and 80Trill, and served as CTO at Buzzdraft. He holds a Master's degree in Computer Science from the University of New Hampshire.
Bryan Pellegrino is the co-founder and CEO of LayerZero Labs. He has also served as Entrepreneur in Residence, Lead Engineer at Machine Learning Architecture, and Co-Founder of OpenToken. Bryan graduated from the University of New Hampshire in 2008 with a degree in Computer Science.
Financing
LayerZero has completed three rounds of financing, with a total disclosed amount of US$293 million. Investors include well-known crypto investment institutions such as Multicoin, Binance Labs, a16z, and Sequoia Capital.
On September 16, 2021, it completed a $6 million Series A financing, with a valuation of $50 million;
On March 30, 2022, it completed a US$135 million Series A1 financing round with a valuation of US$1 billion;
On April 4, 2023, it completed a US$120 million Series B financing round with a valuation of US$3 billion.
FTX participated in the A round of financing on March 30, 2022 as the lead investor. Affected by its collapse, on November 11, 2022, LayerZero officially announced that it had repurchased 100% of the equity, currency rights and other agreements from FTX.
Ecological prosperity
So far, the official supports a total of 31 public chains, including not only Arb, Optimisim and other leading chains, as well as Base, Linea and other new generation second-layer public chains. It also includes BTC ecology, Apt ecology and other public chains related to the non-Ethereum main network. The DeFi ecological field includes leading protocols such as Sushi and Radiant. As the LayerZero cross-chain protocol is continuously deployed to multiple chains, the project's ecology tends to be perfect. Compared with the projects that have already been airdropped, there are two opportunities for airdrops. The first opportunity is the end of the test network, and the main network coin issuance is the day of the airdrop, such as APT; the second is to airdrop as the ecology continues to improve, such as ARB, Arbitrium will airdrop after the main network reaches 2.3 million addresses to meet users' airdrop expectations and further promote ecological prosperity. LayerZero obviously meets the second situation.
What is cross-chain interoperability
The current development trend of blockchain is multi-chain parallelism, but the blockchain itself does not have the ability to communicate with external systems or APIs, and data and value cannot be transmitted seamlessly across the network, resulting in the isolation of the ecosystem and the inability to exchange information with each other.
From the developer's perspective, each deployment constitutes an isolated independent entity, resulting in the backend contracts being unconnected to each other and unaware of each other's existence. For example, a decentralized exchange (DEX) DApp may need to be deployed on Ethereum, BNB Chain, and Polygon networks respectively, so that each version of the DApp is independent of each other.
For users, this multiple deployment approach also increases the difficulty of adoption:
1. Users cannot seamlessly transfer tokens from one blockchain to another.
2. The transfer process is time-consuming and the experience is poor, because assets are usually destroyed on the source blockchain and then re-minted on the target blockchain using a third-party bridge.
3. The security risk of holding assets on multiple blockchains is also high, and it is easy to be attacked by hackers, resulting in loss of funds.
Due to the diversity of blockchain ecosystems, it is critical that these different on-chain environments can interoperate and communicate with each other. A key part of the infrastructure for exchanging data and assets between different blockchains is the cross-chain interoperability protocol. Cross-chain interoperability enables developers to build a unified cross-chain application, that is, the same dApp can be deployed on multiple different blockchains without having to deploy multiple independent versions on different chains, unlocking higher capital efficiency and better liquidity conditions.
Cross-chain solutions
Cross-chain solutions typically involve validating the state of a source blockchain and relaying subsequent transactions to a target blockchain, with a key piece of infrastructure being a cross-chain bridge, which enables assets to be transferred from a source blockchain to a target blockchain. A cross-chain bridge typically involves locking or destroying assets on the source chain via a smart contract, and unlocking or minting them via another smart contract on the target chain. In practice, the use case for a cross-chain bridge is very narrow, and its role is to transfer assets between different blockchains. Therefore, a cross-chain bridge is typically an application-specific service between two blockchains.
LayerZero Technical Features and Advantages
1. Technical features
The most prominent feature of LayerZero is its ultra-lightweight nodes. It uses ultra-light node technology to transmit messages between endpoints of different chains through relays and oracles, reducing costs while ensuring security.
① Safety
LayerZero’s security is independent of external protocols, thus ensuring the stability of the entire protocol consensus. In addition, thanks to the unique oracle and repeater design, the two are independent of each other, and transactions are completed only when both are considered to be true, ensuring the security of information transmission.
② Scalability
LayerZero acts as a universal messaging layer, which means that any contract can be transferred from chain A to chain B to achieve cross-chain interoperability with the first layer network. Through innovative endpoint design, LayerZero can be easily expanded to support any chain, bringing a wider range of application scenarios to the blockchain ecosystem.
③High efficiency
LayerZero’s ultra-light node technology can achieve higher transmission efficiency and reduce verification costs while ensuring security; secondly, LayerZero’s repeaters or oracles do not form any consensus, they simply transmit messages, and all verifications are completed on their own target chains, so the speed and throughput limitations depend entirely on the properties of the two transaction chains.
Ecological Projects
So far, LayerZero has supported more than 20 chains including Ethereum, BNB Chain, Aavalanche, Polygon, Base, etc. The number of independent users has reached 3 million, and the cumulative number of transactions has reached 56 million, but 35% of users have only one interaction record, and only about 730,000 users have more than two interaction records.
User interaction activities mainly occur on BNB Chain, Arbitrum and Polygon. Especially since the Arbitrum token was issued, the community has a strong sentiment to take advantage of airdrops, and the expectation of airdrops has also led to a significant increase in user activity on LayerZero. The number of LZ mainnet contracts has just exceeded 55,000, and the development speed is incredible. There are 30,000 contracts on the testnet, so we can see how actively the project is migrating to the mainnet. Each network has its own characteristics-while providing one function, they are deprived of other functions. For example, the Polygon network currently has the largest number of blocks, and a transaction may take up to 20 minutes. The team tries its best to ensure that no application is completely dependent on the layerZero Lab project. That is, even if we disappear tomorrow, they will be able to continue to develop the LZ protocol because it is permissionless and each application can be built independently
Vision
LayerZero cannot be simply understood as an asset cross-chain bridge, but rather an infrastructure protocol at a lower level than the L1 public chain, which enables higher-level cross-chain messaging and thus breaks through the island effect between chains.
What LayerZero needs to do more is to build a richer cross-chain ecosystem based on the LayerZero protocol and provide the network infrastructure and message transmission layer for the entire chain ecosystem.
Currently, the more representative products built on LayerZero include Stargate and Radiant. In the future, as the LayerZero ecosystem continues to develop, it is expected that more native cross-chain products developed based on the LayerZero protocol will be born.
Risks and opportunities
(1) Risks
The security of LayerZero has not been fully verified, the trust assumption that oracles and relayers need to operate independently from each other is still uncertain, and issues such as the security risks behind the relay mechanism still need to be vigilant. The important thing is how to achieve the decentralization of the relay.
Moreover, LayerZero outsources the task of verifying on-chain information to third parties such as Chainlink, which will to a certain extent lead to uncontrollable security issues and increase potential risks and uncertainties.
In addition, LayerZero has not yet issued tokens, and it is uncertain what its economic model capabilities and token value capture capabilities will be after the project issues tokens.
(2) Opportunities
With the development of blockchain, interoperability between chains has become extremely important, and each chain must achieve secure, efficient and seamless interaction.
As the underlying protocol, LayerZero’s product design is different from the cross-chain bridge projects currently on the market. It uses ultra-light node technology and selects the oracle network to replace the traditional cross-chain continuous streaming transmission, making the protocol more flexible and reducing costs.
At present, LayerZero has linked more than 30 chains and is widely used in various ecosystems. When multi-chain coexistence comes, LayerZero will have a first-mover advantage and contribute to the development of the blockchain ecosystem.
The exclusive project on the entire network, 100% first launch on Binance and OKX first-tier platforms
The total amount of project tokens is 1 billion, and the Ethereum second-layer zk technology cross-chain protocol
Project release mode:
Locked: One month lock and released in 6 months
Unlocked: Released within 72 hours before and after launch
Participating institutions: Binance OKX leads the investment
Listing time: Q2 24
Summarize
The LayerZero project aims to combine the latest achievements in the crypto world. Given the support of the audience (this is important!) and partners, there are all the prerequisites to believe that the project will succeed. Currently, it attracts a lot of attention from users due to the reverse token and the recently announced airdrop.
By combining lightweight nodes, endpoints, and a powerful oracle and relay system, LayerZero provides seamless and trusted inter-chain transactions and is very responsive to users. The protocol allows users (pardon the tautology) to stay on their preferred circuit and access opportunities and assets on other circuits without the need for expensive bridges or centralized exchanges. While there are still some problems to be solved in the evolving cryptocurrency space, LayerZero provides a promising solution to the interoperability problem that cannot be ignored. LayerZero now has a large amount of funding to help them develop multiple focus directions, such as growing the team, growing the ecosystem, attracting other protocols, users, and creating a learning center Matter University.
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