What Is LayerZero (ZRO)?
LayerZero (ZRO) is an omnichain interoperability protocol designed to facilitate seamless communication between different blockchain networks. The protocol aims to address the fragmentation in the blockchain ecosystem by enabling decentralized applications (dApps) to interact across multiple blockchains, enabling data and tokens to move freely across blockchains.
The protocol’s technical architecture integrates Ultra Light Nodes (ULNs), which educe computational resources required for cross-chain operations by offloading validation tasks to off-chain entities such as oracles and relayers, and Decentralized Verifier Networks (DVNs) which consist of independent oracles and relayers that ensure secure and decentralized transaction validation. Messages are encoded into standardized packets to maintain consistency across blockchains. With this design, computational resource requirements are minimized, mitigating single points of failure, and supporting efficient cross-chain interactions, making it ideal for developing decentralized applications that need to leverage on the features of multiple blockchain networks.
Who Created LayerZero?
Bryan Pellegrino and Ryan Zarick, co-founders of LayerZero Labs, aimed to create a more efficient and secure solution for cross-chain communication. Prior to LayerZero, Pellegrino co-founded OpenToken, a company focused on providing solutions for tokenized assets on the blockchain. Both graduated with a degree in Computer Science from the University of New Hampshire.
Their vision has garnered support from major investors, culminating in a $120 million funding round led by a16z crypto, elevating LayerZero’s valuation to $3 billion. The company’s future plans include expanding its presence in Web3 gaming and the Asia-Pacific region.
How Does LayerZero Work?
Send
A transaction on LayerZero begins with a sender initiating a message, packet, or data transfer to a LayerZero endpoint on the source blockchain. The endpoint acts as the transaction’s entry point, securely locking the assets and preparing them for transfer. Encoding the message into a standardized packet format ensures consistency and compatibility across different blockchains. Standardized processes simplify the integration of new blockchains into the LayerZero network.
Verify
Verification involves Decentralized Verifier Networks (DVNs), which consist of oracles and relayers that independently validate the authenticity of transactions. Taking a decentralized approach mitigates the risk of single points of failure, enhancing the protocol’s security, with multiple independent verifiers that ensure transaction integrity remains intact even if one entity is compromised.
Commit
Verified transactions are committed to an off-chain message library, where they are prepared for delivery to the destination blockchain. Executors offchain manage the transaction’s off-chain components, ensuring proper handling of data and instructions before final delivery. Off-chain handling reduces the blockchain’s load, making the process more efficient and cost-effective. Separating verification and execution processes allows LayerZero to maintain high throughput and low latency, which is essential for real-time applications.
Receive
The destination blockchain receives the transaction through a LayerZero endpoint, processed by an off-chain executor, which delivers the assets to the intended recipient. Decentralizing the execution process enhances the resilience and reliability of cross-chain transactions.
Security Mechanisms
Immutable Contracts
Contracts deployed by LayerZero are immutable, which mean that the rules and conditions set at deployment remain unchanged, ensuring they cannot be altered or tampered with after deployment. The immutability of a protocol protects it from potential vulnerabilities and ensures the integrity of cross-chain interactions, through greater security and reliability.
Modular Security
LayerZero employs modular security, allowing developers to configure their decentralized verifier networks (DVNs) for message validation, providing flexibility in implementing tailored security measures. A modular approach ensures LayerZero can adapt to evolving security requirements and protect against emerging threats
Permissionless Execution
LayerZero enables permissionless execution of validated messages, allowing any user to execute a transaction without needing centralized approval, reducing reliance on centralized entities and enhancing protocol resilience.
Why Trade ZRO?
Governance
ZRO token holders can participate in LayerZero’s governance, voting on protocol decisions such as fee accrual and other key changes. Governance is managed through an immutable voting contract, ensuring transparency, security, and tamper-proof decision-making processes. A decentralized governance model empowers the community to influence the protocol’s development and direction, fostering a more inclusive ecosystem.
Transaction Fees
ZRO tokens cover transaction fees for cross-chain messages, which incentivizes network participation, supports the protocol’s development and maintenance, and also aligns the interests of users and developers. ZRO supports active engagement with the protocol and contributes to its long-term sustainability.
ZRO Tokenomics
The total supply of ZRO tokens is capped at 1 billion, with a structured distribution that aims to align the interests of the community, strategic partners, and core contributors, supporting long-term growth and stability of the ecosystem:
Community (38.30%): 383,000,000 ZRO
Strategic Partners (32.20%): 322,000,000 ZRO
Core Contributors (25.50%): 255,000,000 ZRO
Tokens Repurchased (4.00%): 40,000,000 ZRO
In 2024, LayerZero launched a charity-driven airdrop known as “Proof-of-Donation,” requiring users to donate $0.10 in USDC, USDT, or native ETH per ZRO token to claim their allocation. The initial airdrop distributed 85 million ZRO tokens, which is 8.5% of the total supply. Approximately 1.28 million wallets qualified for the airdrop, with eligibility based on platform activity and engagement with LayerZero integrated dApps.
How to Trade ZRO on Flipster?
Sign up for an account on the Flipster website or by downloading the Flipster app (Android or Apple).
Click the [Trade] tab.
Search for ZRO, and click on it.
Select the leverage (up to 100x).
Select either a Trigger Order or Market Order.
Input the amount of crypto you wish to trade, or select a percentage of your available funds to use.
Once you have confirmed the details, click the [Long] or [Short] button to open a position.
Disclaimer: This material is for information purposes only and does not constitute financial advice. Flipster makes no recommendations or guarantees in respect of any digital asset, product, or service. Trading digital assets and digital asset derivatives comes with significant risk of loss due to its high price volatility, and is not suitable for all investors.