What is LayerZero? The operating principle of the full-chain protocol, popular ecological projects, and ZRO token economics
LayerZero has become one of the most anticipated airdrop projects this year, with a valuation of over $3 billion. After the official completed the first phase of the airdrop snapshot in early May and launched the "Syrk Self-Reporting Program" to crack down on Sybil accounts, it finally opened the airdrop eligibility query on June 19.
This article summarizes LayerZero’s operating principles, advantages, token economy, ecological projects, etc. to help readers understand this cross-chain star.
What is LayerZero?
LayerZero is an omnichain protocol that enables cross-chain communication between different blockchains. It provides a new way to interact across chains without the need for a third-party intermediary.
Specifically, it creates a unified network layer that allows all blockchains to connect to each other, which makes communication between different blockchains smoother without the need for cross-chain bridges or other complex solutions. This also makes LayerZero faster and more secure than traditional cross-chain bridges.
In a nutshell, LayerZero is like a universal translation machine 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: Endpoint, Oracle, and Relayer:
Endpoint: LayerZero deploys a set of smart contracts on each supported chain. These smart contracts connect all LayerZero supported chains and can be easily deployed on new chains to include them into the LayerZero network.
Oracle: This is a third-party service whose job is to relay data (also known as block headers) from one chain to another.
Relayer: Its job is to obtain proof of a given transaction. It is worth noting that anyone can become a relayer according to the parameters set by LayerZero, which helps ensure that it is a decentralized system.
Simply put, LayerZero transmits messages between LayerZero Endpoints on different chains through Oracle and Relayer. Oracle transmits block headers (block headers contain transaction information, messages, etc.), and Relayer transmits transaction proofs, and they verify each other to ensure security.
Advantages of LayerZero
Speed: LayerZero is much faster than traditional cross-chain bridges. Transactions can be processed in less than a minute. Traditional cross-chain bridges may take several minutes or even hours due to mechanism problems.
Security: LayerZero is a trustless protocol, which means that no single entity controls the network and no third party is required to keep your funds, solving the security issues of cross-chain bridges in the past.
Scalability: LayerZero is designed to be scalable. The network can handle a large number of transactions without any slowdown, making it ideal for dApps that require high throughput.
Potential Risks of LayerZero
The security of LayerZero has not been fully verified, the trust assumption that oracles and relayers need to operate independently of each other needs to be discussed, and the security risks behind the relay mechanism and other issues still need to be vigilant.
On the other hand, although LayerZero’s theoretical security is not lower than that of the oracle’s trust assumption, which is relatively convincing, the key point may be how to achieve decentralization of the relay.
LayerZero Airdrop and Token Economics?
Airdrop application will be officially opened on June 20
LayerZero officials completed the first phase of the airdrop snapshot in early May and launched the "Syrk Self-Reporting Program" to investigate Sybil accounts. Finally, they opened the airdrop eligibility query on June 19. Users only need to go to the official airdrop eligibility query website and enter the EVM or Aptos address to check whether they are eligible and find out the $ZRO allocation they can get. As for claiming, they have to wait until June 20.
Note: The official said that the airdrop measurement includes the number of transactions, the number of interactive networks, the number of protocols, and the amount of $STG staked, etc.
LayerZero CEO Bryan Pellegrino said that the number of eligible addresses reached 1.28 million. Early interactions enjoy 3 times the weight, and low-value transactions will have their weight reduced by 80%. At the same time, he emphasized that not all Sybil accounts have been eliminated. On the airdrop claim day, Sybil account allocations on the final list will be redistributed to qualified LayerZero Core (official bridge users).
LayerZero Token Economics
Earlier, LayerZero CEO Bryan Pellegrino announced the token economics and possible airdrop distribution of its official token $ZRO. He explained that the total supply of $ZRO is 1 billion, and 23.8%, or 238 million, will be airdropped to the community and developers. 8.5% of the tokens will be circulated on the first day and distributed to:
Official bridge users: 5%
RFP projects (i.e. ecological users): 3%
Community pool: 0.5%
The majority of the remainder will be distributed over the next 36 months, with additional retroactive distributions every 12 months. This means that of the 238 million $ZRO airdropped, 85 million will be in circulation on the first day of listing, and the remaining 153 million will begin to be unlocked 12 months later.
LayerZero Ecosystem Hot Projects
Stargate Finance
The most popular decentralized exchange (DEX) on the LayerZero protocol allows users to exchange tokens between different blockchains:
Supported blockchains: Ethereum, BNB Chain, Avalanche, Polygon, Arbitrum, Optimism…
Interaction methods: cross-chain swaps, adding liquidity, staking tokens, voting in Snapshot
Radiant Capital（RDNT）
The most popular decentralized lending protocol on the LayerZero protocol allows users to lend tokens between different blockchains:
Supported blockchains: BNB Chain, Arbitrum
Interaction methods: deposit, borrow, provide liquidity, vote in Snapshot
