Today we continue to talk about these recently launched projects. The fan group asked me to talk about it, so today we will talk about this project. It was launched on February 1st. It is called zetachain. It is also a cross-chain project and has been launched recently. Many cross-chain projects chainflip, AXL, etc. Because the Bitcoin ecosystem has become popular, many people are working on Bitcoin’s layer 2, so these cross-chain projects also have Bitcoin’s cross-chain capabilities, so they have performed well recently. The current market value of this project is US$350 million, and the total FDV is also US$3.5 billion. The size is not small, so let’s take a look today.
Introduction
ZetaChain is an L1 blockchain that enables interoperability between unrelated chains. The network features block times of only about 5 seconds and finality, without the ability to confirm or restructure transactions. Applications developed on ZetaChain will be able to connect with any other application or blockchain, providing new and existing crypto users with a single access point to Web3. This is achieved by leveraging full-chain smart contracts that can read and write to any other blockchain, even those that do not natively use smart contracts. Developers can also use ZetaChain’s Connector to send data and value messages to any chain with simple function calls.
technology and architecture
(1) EVM layer
The ZetaChain network uses an execution layer compatible with the Ethereum Virtual Machine (EVM) called zEVM. This layer supports EVM functionality such as smart contract creation, interaction and composition. It also allows external chains to call contracts built on zEVM. zEVM contracts can also create outbound transactions on blockchains connected to ZetaChain. All developers building on ZetaChain will create zEVM contracts (which can be standard Solidity contracts). But zEVM contracts must either follow the specific requirements of full-chain contracts or use cross-chain messaging.
(2) Full chain contract
The full-chain contract must implement cross-chain call execution, and only needs to be deployed once on ZetaChain, and then can be connected to the external chain. Linked Chain can also transfer digital assets to contract addresses on ZetaChain. Assets transferred to ZetaChain adopt the ZRC-20 token standard. Full-chain contracts support efficient deployment of existing popular protocols on Ethereum, such as Uniswap and Aave. They can also be integrated with networks that are not smart contract compatible, such as Bitcoin. The gas fees generated by the full-chain contract are settled using the native gas token of the target chain.
The full-chain contract on ZetaChain provides a future-oriented approach to cross-chain functionality, with one-time deployment and immediate access across all integrated networks. This model leverages a synchronous execution environment and is instantly compatible with any new chain supported by ZetaChain, thus avoiding the hassle of redeploying or recoding for different blockchains. Therefore, the full-chain contract is the link for cross-chain interaction and improves user experience by minimizing cross-chain gas fees.
The main advantage of full-chain contracts is their ability to achieve unified state and execution. In CCM and other similar systems such as LayerZero and Axelar, applications with non-uniform states often require complex solutions. However, full-chain contracts support a unified single state, ensuring smooth operation for most use cases. Full-chain contracts can serve as a natively accessible complement to CCM by minimizing inbound and target transaction gas fees while not relying on multiple messages.
(3) Cross-chain message passing
Cross-chain messaging (CCM) is an alternative to full-chain contracts. CCM is used to transfer data and value messages between blockchains, while ZetaChain is the middleman. Developers deploy full-chain contracts on ZetaChain, while CCM-enabled contracts are deployed on external chains. The contract then calls the ZetaChain Connector API, and ZetaChain forwards the message to the target chain, where the CCM-enabled contract on the target chain receives the message. The state is stored in a set of CCM-enabled contracts on different chains.
CCM is useful for applications that only require one-way and asynchronous logic/effects, but do not require (or benefit from) unified state. The main purpose of CCM is to enhance existing applications on external chains through cross-chain functionality. The gas fees generated by CCM-enabled contracts are denominated in ZETA tokens and must be sent to the Connector contract on the source chain.
ZetaChain also uses a burn/mint mechanism to protect the security of digital assets transferred using CCM contracts. The assets are burned on the source chain and minted on the target chain. This mechanism is more secure than bridging or wrapping because these methods hold the transferred assets.
consensus mechanism
ZetaChain is an open source framework developed and built using the Cosmos Software Development Kit (SDK) for building permissionless public Proof-of-Stake (PoS) blockchains and permissioned Proof-of-Authority (PoA) blockchains. The Cosmos SDK helps developers build new blockchains and launch, test and integrate the network after creation.
The Cosmos SDK provides a modular framework to customize new blockchains for specific user needs. It also supports parallel chain operations to accommodate increased throughput needs as user demand grows. Since the Cosmos SDK ensures interoperability, it allows digital assets and their value to be transferred between different blockchains built using the framework. It also supports a proof-of-stake consensus module and decentralized governance through community proposals and voting. In addition to these features, the SDK also includes security measures such as firewalls to safeguard blockchain applications. Due to its numerous features, the Cosmos SDK has been used to build some famous applications and blockchains, such as BNB Chain, dYdX, Osmosis, and Celestia.
The Tendermint consensus mechanism is an asynchronous Byzantine Fault Tolerance (BFT) state machine operated by a validator. Validators take turns proposing and voting on transaction blocks. A block is proposed at each height of the chain, and if the proposed block is not approved by other validators, then a new validator will propose a block for that height. To gain approval, two stages of voting must pass. These two stages are called "pre-voting" and "pre-commit". When more than two-thirds of the validator voting weight approves a block in the same round of voting, the block is finally confirmed.
Voting weight is determined based on the asset pledge weight denominated on each specific blockchain. In the case of ZetaChain, validator node operators must stake ZETA tokens. Since ZetaChain is a delegated proof-of-stake blockchain, ZETA token holders who do not operate a validator node can delegate ZETA tokens to existing validators. The ratio of tokens controlled by a single validator (delegated and self-staking) to the total number of tokens controlled by all validators determines the staking weight and therefore the voting weight
The specific structure is as follows:
ZetaChain's architecture mainly consists of a decentralized validator network that reaches consensus on external states and events and is responsible for updating external chain states through distributed key signatures. Each validator node contains a ZetaCore and ZetaClient, which are bundled together and run by the same operator. ZetaCore generates blocks in the blockchain and maintains a replicated state machine, while ZetaClient observes events on external chains and signs transactions destined to those chains.
ZetaChain's validators can be Basic Validator, Observer or Threshold Signature Scheme (TSS) signers.
(1) Basic Validator (Basic Validator)
Basic validators have specific consensus keys and are responsible for voting on block proposals. Voting rights are obtained by staking ZETA. Basic validators need to be online at all times and able to participate in block production. In addition, running the two verification nodes of observer and TSS signer also requires running the basic verification node. In comparison, running Basic Validator has much less overhead in terms of software and hardware requirements.
(2) Observer
Observers are responsible for reaching consensus on the events and status of external links. Observers monitor transactions, events, and status on these external chains at specific addresses operated by the full nodes of each external chain.
Such validators can be further divided into Sequencer and Verifier roles. Sequencer observes relevant external behavior and reports the information to Verifier, which then verifies and votes on ZetaChain to achieve a simple majority consensus on external behavior. For this process to be effective, many validators need to be involved; however, only one Sequencer is required to report to the validator.
(3) Threshold Signature Signers (threshold signature signers)
TSS signers on ZetaChain hold partial ECDSA/EdDSA keys. Threshold Signature Scheme (TSS) is a digital signature verification method used in multi-party computation (MPC) cryptography. In MPC, private keys are generated from "key fragments", each key fragment is held by a separate party or node. TSS allows the use of a private key when a set key fragment threshold is reached, without requiring all key fragments. For example, if there are 9 people holding key fragments and the set threshold is 5, then as long as 5 of the 9 key fragment holders provide the key fragments they hold, the private key can be used.
Keys used for authenticated interactions with external chains are stored throughout ZetaChain and distributed to multiple signers according to the TSS method described above. ZetaChain uses tokens staked by validators as collateral against malicious validators to ensure that TSS signers will not sign messages on external chains on behalf of ZetaChain.
Competitive product analysis
（1）Shoulders
Axelar is created from the same underlying Cosmos SDK as ZetaChain’s underlying technology. Axelar is committed to full-stack interoperability, a holistic approach that includes not only asset bridging but also permissionless cross-chain smart contract execution and dApp support. The Axelar community has adopted a three-part strategy to expand its connected network (currently 55). The expansion of network connectivity is driven by economic restructuring, Axelar virtual machine deployments for frictionless connectivity, and the pursuit of leaner solutions such as light clients. Compared with Axelar's comprehensive but potentially complex system, the unified execution environment provided by ZetaChain allows users to enjoy a simpler experience, lower gas fees, and better meet messaging needs.
（2）LayerZero
Unlike Axelar, LayerZero stands out from ZetaChain because of its infrastructure. It is not a blockchain and thus provides developers with greater flexibility in terms of protocol implementation. Nonetheless, LayerZero relies on centralized oracles and relayers, which require a higher degree of trust, especially since it runs on a dual-chain entity multi-signature system. Therefore, LayerZero may experience complications with its CCM-type interoperability, just like Axelar and other similar chains. In contrast, ZetaChain promises to position itself as a potential trust-minimized alternative due to its on-chain operations.
（3）THORChain
THORChain is natively integrated with the Cosmos ecosystem and employs similar blockchain development toolkits. Like ZetaChain, THORChain is committed to interoperability and facilitating the flow of assets between different blockchains; however, it uses a unique mechanism to focus on liquidity and security, creating a unique niche.
THORChain is an automated market maker (AMM) based protocol, similar to Uniswap, but different. All assets in the THORChain system are paired with their native asset RUNE. In doing so, THORChain creates a DEX that prevents liquidity fragmentation across pools and ensures that any asset on THORChain is interchangeable with any other asset. In contrast, ZetaChain can take advantage of its more decentralized validator mechanism, wider compatible chain, or relatively relaxed requirements for node operations. Furthermore, THORChain is application-specific, while ZetaChain is a general smart contract platform. This enables ZetaChain users to not only directly compete with THORChain, but also build other applications and use cases beyond DEX applications.
Financing
ZetaChain completed its second round of financing in August 2023, from investors such as Blockchain.com, Human Capital, Vy Capital, Sky9 Capital, Jane Street Capital, VistaLabs, CMT Digital, Foundation Capital, LingFeng Capital, GSR, etc. There it raised $27 million.
Token economy
The total number of tokens is 2,100,000,000, of which 236,468,750 are currently in circulation, with a circulation rate of 11.2%. The current currency price is around US$1.5.
The token distribution is shown in the figure below. The team took about 46.5% (protocol treasury + core contributors), which is still relatively high.
In conclusion, in fact, the essential technical difference between this project and other competing products is not very big. Each project can be said to have its own advantages and disadvantages. The next step is to look at its operational capabilities. Because it is an L1, so it is Compared with ecology, if the project ecology is good, then it can stand out, and these projects have just been launched or some have not been launched yet, so you have to look at the details. However, at present, the FDV is not low, and there is room for improvement, but there is also Not very big.