What Is LayerZero? Omnichain Protocol (Express Summary)
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LayerZero is an open-source omnichain interoperability protocol that facilitates seamless communication and information sharing between multiple blockchains. It aims to solve the problem of liquidity fragmentation and isolation among different chains. The protocol employs a unique technique to allow various blockchains to interact with each other, enabling functionalities such as swaps, transfers, borrowing, and lending across different chains.
LayerZero’s functionality is achieved through the deployment of smart contracts known as LayerZero Endpoints on supported chains. These endpoints connect all the supported chains within the LayerZero network. Transactions between chains are validated by independent entities called the Oracle and the Relayer, ensuring the validity and security of cross-chain actions.
The protocol’s security has been a topic of discussion, with concerns about collusion between the Oracle and Relayer, potentially compromising the platform. However, LayerZero utilizes an Ultra Light Node (ULN) and decentralized oracles to securely transfer messages between chains without the need for a middleman chain or expensive on-chain light nodes.
LayerZero’s modular and scalable design allows for easy integration of new chains and functionalities without requiring core protocol modifications, making it a flexible solution compared to other approaches.
Use cases for LayerZero include bridging, cross-chain swaps, cross-chain borrowing, omnichain fungible tokens (OFTs), cross-chain governance, and omnichain non-fungible tokens (ONFTs). Various DeFi projects and NFT collections have already integrated LayerZero’s solutions to facilitate seamless cross-chain operations.
While the article mentions speculation about a potential ZRO token airdrop, the LayerZero team has not officially confirmed it. Nonetheless, the protocol continues to grow, and more innovative products are expected to be developed on its technology.
LayerZero is backed by prominent investors, including Sequoia, a16z, Coinbase Ventures, Franklin Templeton, and Christie’s, and has successfully raised $120 million in a Series B funding round, valuing the project at $3 billion.
In conclusion, LayerZero serves as a critical infrastructure for an interoperable and omnichain crypto ecosystem, providing solutions to enhance the functionality and connectivity of various blockchains.