Traditionally, in the realm of cross-chain bridges, we have become accustomed to seeing solutions focused solely on "asset cross-chain" functionalities. However, over time, some projects have begun to explore the realm of data transmission. LayerZero stands as one of the pioneers in this field, dedicating its efforts to developing solutions that facilitate the implementation of cross-chain data transmission.
LayerZero is a protocol that boasts full-chain interoperability, with a focus on enabling data message transmission between different blockchains. A common term used within the industry to describe this type of bridge is "Arbitrary Messaging Bridges (AMBs)," which allow for the transfer of various data types, including tokens, chain states, contract calls, non-fungible tokens (NFTs), or governance votes, between Chain A and Chain B.
What is Layer Zero?
Layer Zero is a foundational protocol for generic data communication, transmitting information across chains securely and straightforwardly to achieve inter-chain communication between applications. By providing a powerful base layer of communication primitives, it lays the groundwork upon which a diverse set of cross-chain applications can be built. Developers can create seamless cross-chain applications, such as cross-chain DEXs or multi-chain yield aggregators, without relying on trusted custodians or intermediary transactions.
Technical Advantages of Layer Zero
Layer Zero utilizes Oracles and Relayers to convey information between Layer Zero Endpoints on the target chain. Oracles are third-party services that offer a mechanism for reading block headers from one chain and sending them to another. The Layer Zero team has chosen Chainlink and Band Protocol as their official oracle providers. However, theoretically, any Oracle service provider could be part of this mechanism. Relayers are off-chain services that operate similarly to Oracles, but their job is to obtain proof of specific transactions. Oracles publish block headers from the source chain to the target chain, while Relayers publish transaction data and verify transaction proofs, keeping Oracles and Relayers independent of each other.
By combining the low cost of third-party verification networks with the high security of light nodes, Layer Zero's proposed ultra-light nodes provide high security at a lower cost. This cost-effective approach could save developers significant learning and operational costs, greatly reducing the usage fees for users, thereby offering cross-chain applications built on Layer Zero a strong cost advantage.
Scalability has always been a challenging hurdle for blockchain-based solutions, but Layer Zero has overcome this issue. Moreover, it has broadened the range of applications within the blockchain ecosystem, including data verification, personal reward structures, and digital currency wrapping, among others. As a foundational layer, Layer Zero can achieve cross-chain interoperability with Layer 1 protocols such as BTC, ADA, and ETH. Operators can deploy relay networks across multiple nodes (like Bitcoin and Ethereum) with the help of Layer Zero. Unlike patching the underlying protocols of existing blockchain networks, Layer Zero is modular and scalable, allowing the addition of new chains and functionalities without modifying the core protocol. This makes it a more flexible and scalable solution.
Security of Layer Zero
As a foundational protocol, Layer Zero's security is independent of external protocols. Even if an external protocol faces security issues or attacks, it does not affect the security of Layer Zero, thus ensuring the stability of the entire protocol consensus. Additionally, Layer Zero's unique design of oracles and relayers maximizes the security of information transmission. Oracles and relayers maintain their independence, meaning that even in the worst-case scenario where both are operated and collude with the same entity, it would only pose an isolated risk with a very low probability of success, and the cost of an attack would be prohibitively high. Furthermore, to minimize risks, Layer Zero allows user applications to choose different oracle/relayer combinations, and users can even run their own relayers. These measures provide the most secure protection for information transmission.
Funding Status of Layer Zero
As of today, Layer Zero has completed three funding rounds, totaling $315 million. In March 2022, Layer Zero secured $135 million in Series A funding at a valuation of $1 billion, co-led by a16z, Sequoia Capital, and the now-dissolved FTX's venture capital arm. On April 4, 2023, Layer Zero Labs successfully raised $120 million in Series B funding, reaching a valuation of $3 billion. This round was the largest in the crypto and blockchain sector since the FTX implosion in November of the previous year, with nearly 36 institutions participating, including a16z crypto, Circle Ventures, OKX Ventures, OpenSea Ventures, Samsung Next, and Sequoia Capital.
The Team Behind Layer Zero
In 2010, three individuals co-founded the software development company Coder Den. Ryan Zarick and Caleb Banister also co-founded 80Trill and Minimal AI; CEO Bryan Pellegrino founded OpenToken in 2017. In 2021, they reunited to co-found LayerZero Labs. Caleb Banister is a co-founder of LayerZero Labs, specializing in writing and auditing smart contracts for blockchain projects. A professional Solidity developer, Caleb holds a Bachelor's degree in Computer Science from the University of New Hampshire. He is a skilled Java and Linux programmer, working on building the future and the multi-chain metaverse.
Ryan Zarick is a co-founder and CTO of LayerZero Labs, a company based in Vancouver, British Columbia, Canada, working on the blockchain's Layer 0. An experienced software developer and entrepreneur, Ryan has over ten 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. Ryan has over 500 connections on LinkedIn and is mutually connected with Max Kaufman.
The Ecosystem Layout of Layer Zero
Currently, Layer Zero has launched a variety of ecosystem components, including cross-chain bridges, NFTs, DEXs, and decentralized wallets. As developers continue to explore new all-chain use cases, Layer Zero will be able to build more new applications, including NFTFi, yield aggregators, all-chain wallets that do not require changing RPC, games, social networks, and DIDs. Layer Zero has already integrated over 40 chains, including Aptos and Solana. And through projects like Sushiswap, Trader Joe, and Pudgy Penguins, Layer Zero has proven its product fit and efficient implementation.
Conclusion
To truly realize Web3.0, a foundational network capable of full-chain interoperability is necessary. As a strong contender in this field, Layer Zero will undoubtedly continue to contribute to the progress and development of the blockchain industry. However, it's worth noting that despite Layer Zero's strong narrative, many details have yet to be disclosed and perfected, presenting certain risks. Additionally, Chainlink's cross-chain interoperability protocol, CCIP, has already entered the field, indicating that it could become a formidable competitor to Layer Zero in the future.
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