foreword
The recent Arbitrum airdrop once again ignited the market's enthusiasm for "airdropping". In addition to the ZK-based zkSync, Starknet, and Scroll, some users also turned their attention to LayerZero, which is valued at $3 billion. And LayerZero’s just-completed US$120 million B round of financing has also made its market popularity continue to rise. Under the two-way blessing of “airdrop boom” and “large financing”, what development potential does LayerZero have?
What is Layer Zero?
The widespread use of blockchain provides developers with a variety of platforms on which to run their smart contracts depending on the application's functionality and requirements for throughput, security, and cost. However, the consequences of this freedom have been severe divisions. Each chain is isolated, forcing users to isolate their liquidity and limiting options for moving liquidity and state between walled ecosystems.
And the first trustless full-chain interoperability protocol - LayerZero, supports all cross-chain communication between Layer 1 and Layer 2. It provides a powerful base layer of communication primitives upon which a diverse set of cross-chain applications can be built. Using this new primitive, developers can implement seamless cross-chain applications, such as cross-chain DEXs or multi-chain yield aggregators, without having to rely on trusted custodians or intermediary transactions.
At present, all cross-chains need an intermediary medium to complete, and what LayerZero has to do is to remove the intermediate currency and the intermediate chain, and realize direct communication between all chains. This process is realized by additionally setting up two independent entities—Oracle (oracle machine) and Relayer (repeater)—to independently obtain part of the information in a block and verify each other. The functions of these two entities are similar, but the information obtained is different, which is equivalent to using two information sources for verification.
LayerZero will deploy a terminal endpoint on each chain, which is composed of a series of LayerZero smart contracts. It can be understood as a "communication point" on this chain. The purpose is to allow users to send messages using the LayerZero protocol backend to ensure effective delivery. . The LayerZero endpoint is divided into four modules: Communicator, Validator, Network, and Libraries. Communicator/Validator/Network is the core component of the LayerZero terminal, and it is added as an additional library to the new chain supported by LayerZero every time. This design allows us to add support for the new chain without modifying the three core modules. The function of these three core components is to notify Oracle and Relayer to obtain specific information and receive messages from them.
Advantages of LayerZero
1) Security: the transaction will be completed only when the oracle machine and the repeater both agree that the transaction is considered real, thereby reducing malicious transactions;
2) Lightweight: There is no need to provide protocol communication based on the nodes of the upper chains of chains A and B. Instead, it can be freely deployed by the project party, and the template and even the repeater provided by LayerZero can also be designed by the user;
3) Isolated risk infrastructure: the permissionless use of oracles and relays gives the protocol the ability to independently select them, providing the advantage of isolating the risks borne by the protocol and its users;
4) Efficiency: Neither LayerZero's repeaters nor oracles form any consensus or verification, but simply transmit messages. Since all verifications are done on their respective source chains and target chains, the speed and throughput limitations are completely Depends on the properties of the two transaction chains;
5) True cross-chain composability: LayerZero is a universal messaging primitive, which means any application can connect any contract on blockchain A to any other contract on blockchain B. Multi-chain currency market aggregation can be achieved from the user perspective, the user experience is simple and intuitive, and all the complexities related to multiple exchanges, bridging and intermediate tokens are abstracted away. From a protocol perspective, cross-chain governance can be achieved, and LayerZero supports unified governance, allowing users and token holders of each chain to vote locally from any chain they are in through simple messages.
What are the advantages of LayerZero over other cross-chain protocols?
From the very beginning, LayerZero did not simply position itself as an ordinary asset cross-chain bridge, but hoped that it could become a lower-level infrastructure-level protocol than the Layer1 public chain, and then completely solve the liquidity split between many public chains in the future , The use of applications requires frequent switching of wallets and other deep-seated problems.
1) Stronger versatility: LayerZero adopts the "ultra-light node" technical architecture, which greatly reduces the cost of public chain integration;
2) The balance between security and efficiency: Although LayerZero's "ultra-light node" adopts a verification mode similar to IBC light nodes, it chooses to obtain the required block headers on demand through the oracle and verify the transaction, thereby realizing the guaranteed Under the premise of security, the cost of verification is greatly reduced.
LayerZero Financing Progress
Ecology of LayerZero
1) Cross-chain bridge: The most common cross-chain bridge mode is the locking and casting mode, but the biggest disadvantage is that native assets cannot be sent on different chains. And the LayerZero ecological cross-chain bridge Stargate can make transactions seamlessly bridged on the chain
2) Full chain token: the token can be combined on all LayerZero integrated blockchains
3) Full-chain NFT: NFT can be moved across chains, and NFT projects do not need to split user groups by launching new projects on each chain
4) Derivatives trading: One of the main problems of DEX is the lack of liquidity, while Rage Trade built on LayerZero tries to provide circulating liquidity through LayerZero by self-building a bridge for all ETH/USD pools
5) Currency market: Through LayerZero messaging and Stargate’s router interface, Radiant Capital allows users to deposit any asset on Arbitrum and BNB, and instantly borrow any asset on the blockchain supported by LayerZero
As developers continue to explore new full-chain use cases, LayerZero will be able to build more new applications, including NFTFi, yield aggregators, full-chain wallets without changing RPC, games, social networking, and DID. LayerZero has currently integrated more than 40 chains, including Aptos and Solana. And LayerZero has proven product fit and efficient implementation through projects such as Sushiswap, Trader Joe, and Pudgy Penguins.
Interaction with LayerZero
