LayerZero is a communication method that facilitates cross-chain applications. The underlying messaging of the platform allows the development of full-chain functionality such as decentralized exchanges, money market protocols, and many other DeFi applications that can benefit from cross-chain liquidity provisions.
The LayerZero platform launched in September 2021, and the Stargate Finance cross-chain bridge is the first application built on the platform. The project has raised $261 million over 3 rounds, doubling its valuation from $1 billion to $2 billion between March 2022 and March 2023.
Data analytics firm Nansen reports that decentralized applications (Dapps) built on LayerZero are the most used entities on blockchain platforms including Aribtrum, Optimism, Ethereum, Binance Chain and Polygon.
During the first week of April, LayerZero-powered apps like Stargate and Radiant Finance were the most used on Arbitrum and Optimism. On Polygon, Binance Chain, and Ethereum, LayerZero and its app are ranked 7th to 30th in terms of user activity.
Nansen Blockchain Data and Research Institute owns tweet:
“LayerZero Labs raises $120M at $3B valuation. ZRO airdrop tweet is trending again. Data shows LayerZero is one of the top entities on Arbitrum, Optimism, Avalanche, BNB Chain, Fantom.”
Source: Nansen
The main driver of adoption is speculation of an airdrop of LayerZero’s native token. The team mentions ZRO tokens in their source code on Github, so it is likely that an airdrop will be created for initial users.
LayerZero official documentation mentions ZRO | Source: LayerZero Gitbook
LayerZero Ecosystem Growth
Stargate Finance is the cornerstone of the LayerZero ecosystem. Cross-chain bridges allow transfers between Ethereum, Binance Chain, Polygon, Aribtrum, Optimism with optimal liquidity and security. According to DeFiLlama data, the total value (TVL) locked in the Stargate pool is currently $419 million, second only to Multichain Protocol.
The LayerZero protocol was also used to connect siled ecosystems like Aptos to Ethereum, demonstrating the ability of messaging protocols to bridge incompatible ecosystems. There is also a dedicated bridge for transferring Wrapped Bitcoin (WBTC) on Ethereum-compatible blockchains.
In addition to bridges, the messaging protocol also serves lending protocols and decentralized exchanges (DEXs). Radiant Capital is the leading lending platform built using LayerZero technology. The total value of this multi-chain market-making protocol has grown from less than $30 million in early 2023 to $200 million.
InterSwap and Hashflow are building a Uniswap-like decentralized cross-chain exchange on LayerZero. Pontem Network, the DeFi hub on Aptos, has also leveraged LayerZero’s technology to build a suite of DeFi applications such as DEXs, lending gateways, and NFT marketplaces.
As such, the LayerZero ecosystem appears to be growing significantly in cross-chain applications as the airdrop craze brings liquidity and drives usage of applications built on top of it.
When several other cross-chain interoperability platforms are being developed, LayerZero enjoys a first-mover advantage due to its superior design.
- Arbitrum Airdrop attracts interest in DeFi
- LayerZero Raises $120M in Raise, Raises Valuation to $3B
- Render Token (RNDR) Shows Signs of Uptrend Continuation
Ming Ying
As reported by Cointelegraph
