LayerZero is an open-source, immutable messaging protocol designed to facilitate the creation of multi-chain, interoperable applications. In this article, we will talk about the ones that will be listed on the Binance exchange. #layerzero We will explain what ($ZRO) is.
Highlights:
The proliferation of blockchains, while great for innovation, has created an interoperability problem where the numerous existing blockchains cannot communicate effectively with each other.
The most widely used solutions for blockchain interoperability, particularly through the use of centralized middle chains, end up compromising security and decentralization to remain cost-effective.
LayerZero is an interoperability protocol that aims to be a foundational layer that connects all blockchains while preserving the fundamental pillars of the blockchain ethos.
LayerZero is an immutable, censorship-resistant, and permissionless smart contract protocol that allows anyone on the blockchain to send, verify, and execute messages on a supported target network.
LayerZero's direct cross-chain transaction capability opens up opportunities for a variety of large-scale applications, including decentralized exchanges, yield aggregators that span multiple chains, and cross-chain lending.
Users benefit from the flexibility to move liquidity across blockchains without relying on third-party systems. This feature allows a single liquidity pool to be used across a variety of decentralized finance (DeFi) applications across different chains and ecosystems.
In summary, you can think of LayerZero as a universal translator for various blockchains. It simplifies the exchange of assets and facilitates the use of different applications across multiple blockchains.
Origin of LayerZero
LayerZero was developed to solve the problem of fragmentation of blockchains. When there are many independent chains, users face difficulties in managing their resources and liquidity because they are isolated from each other.
This limits the flexibility of moving liquidity and data between these different ecosystems.
Thanks to LayerZero, users can bring together dispersed liquidity and efficiently use applications spread across different chains. This results in the creation of a seamlessly connected multi-chain ecosystem and offers a glimpse into the potential future of blockchains.
How Does LayerZero Work?
LayerZero's interoperability protocol consists of three main components: the Ultra Lightweight Node (ULN), a decentralized oracle, and relays.
Ultra Light Knot (ULN)
Light Nodes operate as mini validator nodes on the target blockchain. They manage the retrieval of data from the source chain and integrate it into the target chain.
However, Light Nodes sacrifice cost-effectiveness for improved security. LayerZero solves this problem by offering Ultra Light Nodes (ULNs), which work similarly to Light Nodes but optimize cost by packaging and sending multiple transactions simultaneously upon request of the target chain.
LayerZero claims that this approach provides a high level of security, similar to on-chain Light Nodes.
Oracles
Oracles facilitate communication between decentralized systems and the outside world. This connection applies between Web3 and Web2 domains as well as decentralized applications.
LayerZero's interoperability protocol leverages decentralized oracles such as those developed by Chainlink and the Band protocol. These oracles create data streams and seamlessly integrate them into the target system for easy use.
relays
The role of relays is to complete the messaging loop between communicating networks. They accomplish this by sending proof of the transaction to the target, allowing the target chain to integrate the data or message from the source chain and execute the relevant commands.
LayerZero Study Summary
LayerZero creates endpoints such as Network A (source chain) and Network B (destination chain) on each communicating network.
To send a message from Network A to Network B, a user application selects a preferred oracle (such as Chainlink DON) and a relay for the cross-chain message.
The endpoint on Network A provides the message details, including its destination, to the Chainlink DON and the selected relay. Oracle transmits these details to Network B and simultaneously the relay sends the proof of the transaction to the destination chain.
LayerZero Use Cases
Nowadays, cross-chain messaging is often associated with bridging assets, but LayerZero offers much more than that.
Providing a comprehensive solution, it facilitates various cross-chain functions such as state sharing, bridging, lending and borrowing, swaps, and governance.
Conclusion
The issue of limited compatibility between blockchains is slowing down the widespread adoption of blockchain technology.
Current bridging solutions, although available, do not provide a seamless user experience. LayerZero stands out by focusing on making cross-chain communication as seamless as possible at the local level.
Unlike other solutions that attempt to fit transferred assets into target chain formats, LayerZero offers a distributed infrastructure for chain-agnostic crypto transfers and other applications.
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