LayerZero (ZRO)
Blockchain technology is often referring to terms of its different layers, which can be confusing for those new to the field. But what if we told you that there is a project that names itself as a layerzero? Well, in this deep dive, we will explain what this means and why a project such as LayerZero could be ambitious in achieving what for many is the end goal of crypto: coming all together and ‘revolutionize’ cross-chain communications.
We all know layer one blockchains – it is where the actual blockchain protocol resides, such as Bitcoin and Ethereum, and where the basic rules and structure of their networks are established.
Built on top of that are the layer two solutions that enhance scalability and functionality, using technologies like sidechains, state channels, and off-chain scaling. But today we are going to check the layer beneath it all.
As layer zero refers to the physical infrastructure and protocol layer of a blockchain network. This foundational layer is even under layer one and includes the hardware, such as servers and network devices, as well as the underlying protocols that govern how data is transmitted and verified across the networks built on top of.
A layer zero can be seen as foundational and critical; it provides the stability and reliability of the entire blockchain. You could say it is the technology that enables applications to move data across.
The project LayerZero, developed by LayerZero Labs, serves as this – a backend technology that facilitates the movement of funds across different blockchains. If you’ve used a blockchain bridge, there’s a possibility that LayerZero was operating behind the scenes, unknown to many.
LayerZero offers another approach than most blockchains that operate within isolated ecosystems or use bridging solutions for asset transfers.
The protocol is divided into distinct layers and components, each fulfilling a role in the functionality of the protocol:
This review of LayerZero (ZRO) was created for informational purposes. This article is not intended for promotion.
LayerZero enables applications to utilize any blockchain as a ledger. This is done through their Omnichain Fungible Token (OFT) Standard, that allows developers to extend the conventional ERC20 token functionalities, such as recording balances and transactions across multiple blockchain networks, like Avalanche, Ethereum and Binance Smart Chain.
This is achieved by deploying an OFT contract on each desired blockchain, which can then debit tokens from one chain and credit them to another.
The modularity introduced by LayerZero also allows application developers to configure their security measures, such as those handling governance decisions across blockchains.
For instance, a decentralized autonomous organization (DAO) on Ethereum can now push governance decisions to another chain without requiring any authority on the destination chain.
Ethena, notable for its rapidly growing stablecoin offerings such as USDe, sUSDE, and ENA, uses the Omnichain Fungible Token (OFT) standard.
EtherFi also uses it for its L2 restaking capabilities on platforms like Blast and Mode.
But more importantly, the use of LayerZero can be found in the gaming sector, where some play to earn games like Heroes of Mavia are choosing LayerZero for its interoperability features.
The project boasts a clear advantage with no tokens scheduled to be unlocked until July 2025, providing a stable outlook on its market supply and demand dynamics.
The current token does not serve as a governance token, nor is there an operational decentralized autonomous organization (DAO), which casts doubt on the token’s utility and the project’s decentralized governance claims.
While LayerZero shows promise due to its utility in enabling cross-blockchain transactions, the vast number of tokens yet to be released poses a risk for potential long-term investors.
For those interested in the LayerZero airdrop, it’s important to visit the official website to check your eligibility. If you want to be eligible for the airdrop follow the next steps;
To start, you’ll need a MetaMask wallet funded with some Ethereum (ETH).
The next step involves purchasing and staking STG, the governance token of Stargate Finance, which operates on the LayerZero network. It is advisable to purchase STG on cost-effective networks like BSC or Arbitrum to save on gas fees.
Remember, buying on a centralized exchange may not qualify you for the airdrop.
After staking your STG tokens, participate in the governance of Stargate Finance by voting on proposals. You can find active proposals on the Stargate governance forum and vote using the Snapshot page linked there.
Utilize the Stargate Bridge to transfer any token between two chains. This action not only shows active use of the LayerZero infrastructure but also helps familiarize users with the process of cross-chain transfers.
LayerZero’s integration with Solana is anticipated to further enhance its interoperability capabilities and market reach.
The market cap and the valuation at the initial funding rounds indicate that while the technology is valued highly by venture capitalists, the actual market adoption and utility may not fully justify the current valuation without broader market participation and clearer utility demonstrations.
LayerZero presents a compelling case for a mid-term hold in your cryptocurrency portfolio. Its strong foundation in blockchain interoperability, combined with advantageous market cap and tokenomics, positions it well for future growth. With no token unlocks until July 2025 and potential high-impact developments like the integration with Solana on the horizon, ZRO is poised for significant movements in both its adoption and price.
Disclaimer: Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.
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