This article compiles the operational principles, advantages, token economics, and ecological projects of the LayerZero cross-chain interoperability protocol to help readers understand this star of cross-chain technology.
What is LayerZero?
LayerZero is an omnichain interoperability protocol that enables cross-chain communication between different blockchains. It provides a new way for cross-chain interaction without the need for a third-party intermediary.
Specifically, it creates a unified network layer that allows all blockchains to connect to each other, making communication between different blockchains smoother and faster without the need for cross-chain bridges or other complex solutions. This makes LayerZero faster and more secure than traditional cross-chain bridges.
In essence, LayerZero acts as a universal translator between different blockchains, making it easier to exchange assets and use different applications across multiple blockchains.
How does LayerZero work?
The LayerZero protocol consists of three main components: Endpoints, Oracles, and Relayers.
Endpoints:
LayerZero deploys a set of smart contracts on each supported chain, connecting all blockchains supported by LayerZero and easily deploying them to new chains to include them in the LayerZero network.
Oracles:
This is a third-party service that relays data (also known as block headers) from one chain to another.
Relayers:
Their job is to obtain proof of specified transactions. It is important to note that, according to LayerZero parameters, anyone can become a relayer, which helps ensure that it is a decentralized system.
In simple terms, LayerZero uses Oracles and Relayers to transmit messages between LayerZero Endpoints on different chains, ensuring security through the verification of block headers and transaction proofs.
Advantages of LayerZero
Speed:
LayerZero is much faster than traditional cross-chain bridges, with transactions being processed in less than a minute, compared to several minutes or hours for traditional cross-chain bridges.
Security:
LayerZero is a trustless protocol, meaning that no single entity controls the network, and there is no need for third parties to safeguard your funds, addressing past security issues with cross-chain bridges.
Scalability:
LayerZero is designed to be scalable. The network can handle a large number of transactions without any slowdown, making it suitable for high-throughput dApps.
Potential risks of LayerZero
The security of LayerZero has not been fully verified, and the trust assumptions between Oracles and Relayers running independently need to be further examined.
On the other hand, while LayerZero’s security in theory is not lower than the trust assumptions of Oracles, the key may lie in achieving decentralized relaying.
LayerZero Airdrop and Token Economics
Airdrop Claiming Opens on June 20
LayerZero completed the first phase of the airdrop snapshot in early May and launched the “Witch Self-Reporting Program” to crack down on witch accounts. Finally, on June 19, it opened the airdrop eligibility check. Users can enter the official airdrop eligibility check website and enter their EVM or Aptos address to check eligibility and learn about the $ZRO allocation. Claims can be made starting on June 20.
LayerZero CEO, Bryan Pellegrino, stated that there are 1.28 million eligible addresses. Early interactions will receive a 3x weight, and low-value transactions will reduce weight by 80%. He emphasized that not all witch accounts have been eliminated, and on the day of airdrop claiming, the allocation of witch accounts on the final list will be redistributed to LayerZero Core (official bridge users) qualifiers.
LayerZero Token Economics
LayerZero CEO, Bryan Pellegrino, has announced the official token economics of $ZRO and potential airdrop allocations. He explained that the total supply of $ZRO is 1 billion, with 23.8% allocated to the community and developers, equivalent to 238 million tokens. 8.5% of the tokens will be in circulation on the first day, distributed to official bridge users (5%), RFP projects (3%), and the community pool (0.5%). The remaining majority will be distributed over the next 36 months, with additional retroactive distributions every 12 months. This means that of the 238 million $ZRO airdrop, 85 million will be in circulation on the first day, with the remaining 153 million unlocking after 12 months.
$ZRO Over-the-Counter Price?
While $ZRO has not officially launched, it is already trading in pre-market markets such as Kucoin and Whale Market. According to Kucoin, the latest transaction price of $ZRO is $4.53, with an average transaction price of $3.612.
If calculated at the average price, this means that LayerZero’s Fully Diluted Valuation (FDV) is approximately $36.12 billion, lower than Wormhole’s $45 billion FDV.
Popular Projects in the LayerZero Ecosystem
Stargate Finance
Stargate Finance is the most popular decentralized exchange (DEX) on LayerZero, allowing users to exchange tokens between different blockchains.
Supported Blockchains: Ethereum, BNB Chain, Avalanche, Polygon, Arbitrum, Optimism
Interactions: Cross-chain exchange, liquidity provisioning, token staking, voting in Snapshot
Radiant Capital (RDNT)
Radiant Capital is the most popular decentralized lending protocol on LayerZero, allowing users to borrow tokens between different blockchains.
Supported Blockchains: BNB Chain, Arbitrum
Interactions: Deposits, loans, liquidity provisioning, voting in Snapshot
RageTrade
RageTrade is a decentralized derivatives exchange that allows users to trade futures, options, and other derivative contracts on multiple assets.
Supported Blockchains: Arbitrum
Interactions: Deposit funds for trading
OmniBTC
OmniBTC is a cross-chain liquidity aggregation protocol, allowing users to engage in composable cross-chain DeFi transactions.
Supported Blockchains: Aptos, Sui, StarkNet, EVM blockchain networks
Interactions: Cross-chain exchange, cross-chain trading, cross-chain lending
Aptos Bridge
Allows users to transfer assets between the Aptos blockchain and other blockchains.
Supported Blockchains: Aptos, EVM blockchain networks
Interactions: Cross-chain exchange
Gh0stly
Gh0sts is the first cross-chain NFT series launched by LayerZero, circulating on 8 supported blockchains. NFT background colors are determined by the blockchain, such as gray for Ethereum, yellow for BNB, and purple for Polygon.
Supported Blockchains: Ethereum, Arbitrum, Optimism, Binance Smart Chain, Avalanche, Polygon, Fantom
Interactions: Holding NFTs
For more news about LayerZero, click here.
Related Reports:
Understanding the Three Giants of Chain Abstraction: Axelar, Wormhole, and LayerZero
LayerZero Changes Airdrop Rules! Speculators Forced “Witches” to Surrender, Aiming to Destroy the Masturbating Studio
LayerZero Emphasizes No Self-Enrichment, CEO: Employees Cannot Claim $ZRO Airdrop, Direct Dismissal for Violation