Layerzero is a user application and a configurable on-chain endpoint than operates using a ULN(Ultra Light Node) to facilitate secure transfer of messages between blockchains. The message protocol relies on decentralized oracles and a relayer to relay data between on-chain endpoints. When a UA(User Application) sends a message from chain A to chain B, the message data is routed through an endpoint on chain A while notifying the specified UA oracle and relayer of the message and its destination chain. The oracle then forwards the block header of the message to the endpoint on chain B while allowing the relayer to transmit the transaction proof. Once the destination chain validates the proof, the message is then transmitted to the destination address. This protocol is aimed at enabling interoperability among chains by giving life to cross-chain applications with a low level communication primitive. This technology is then set to allow direct cross-chain transactions to take place between blockchain networks without a third party to broker the transaction hence save on transaction costs. With more finetuning, the framework is set to become a true web3 messaging protocol.
Recently, LayerZero has managed to raise $120 million in a series B fundraising round. The event was conducted at a current valuation of $3 Billion, jumping from $1 million from before the fundraiser. The event has been dabbed as a strategic alignment and saw participation from over 33 investors including Opensea, Samsung Next, BOND, Sequoia Capital and Circle Ventures among others. Since its launch, almost a year ago, the platform has managed to secure over $7 billion in total value with a $6 billion transaction volume. In the same period, the platform has garnered hundreds of thousands of unique users. The protocol connects over 30 mainnet blockchain networks including Aptos and Solana which are non-Ethereum Virtual Machines. The protocol has also found application in decentralized exchanges like PancakeSwap, SushiSwap and UniSwap among others. According to the platform’s CEO, Bryan Pellegrino, it took the platform around seven and a half months to hit 1 million messages and two an a half to hit the next million messages. Mr. Pellegrino also revealed that the platform is rapidly evolving and it will soon take then just weeks to reach the same volume.
LayerZero had previously raised $135 million in 2022 and the recent event bring the total funds raised to $250 million. Unlike instant messaging apps commonly seen in web2 platforms like Whatsapp and Telegram, the protocol facilitates internet-packaged messaging between computers. It also allows for different messages containing different types of data to be transmitted across chains. According to Mr. Pellegrino, LayerZero has plans to take its operations into the gaming industry and expand into the APAC(Asia-Pacific) region to tap into the massive growth potential available in that market. In the long-term, he platform has plans to continue building the primitives to allow developers to build more complex structures across industries including but not limited to gaming and DeFi.
The protocol cements the reason behind why blockchain was invented in the first place, trustlessness. The fact that the protocol is very light weight ensures that it can be supported on any chain. In the long-term, this protocol will create a fully connected network with each node having a direct link to any node on any blockchain and in the process solving the greatest challenge in decentralized applications – interoperability. One of the areas that will get an uplift by this protocol is the way blockchain liquidity pools operate. Instead of having to move liquidity pools across multiple blockchains, the protocol can leverage a single liquidity pool to support multiple DeFi applications across different chains and ecosystems.
