Layer Zero Protocol

Enabling blockchain interoperability in a multi-chain world

TLDR:

• Layer Zero protocol is built to support interoperability between blockchains in this ever more dynamic multi-chain world.

• The protocol uses a mesh network that connects up all supported chains with one another, and it employs a standardised message passing interface.

• Layer Zero is one of the biggest players in blockchain interoperability and it has an airdrop on the way in 2024 that you can start farming right now!

This week I’ve been working on a project for a client that implements the Layer Zero protocol in order for them to move their token across several chains.

Layer Zero also happens to have one of the most hyped airdrops out there! So today I thought it would be worth talking about what it is and how it works.

Meanwhile Bitcoin’s price keeps shooting up! 🚀

Layer Zero

The future of Web3 is clearly multi-chain as I’ve covered a few times before like on my Ethereum Layer 2 post and when discussing Bridges.

And as Web3 does indeed become more multi-chain we need smart solutions to connect up all these chains. This is where the Layer Zero protocol comes in!

Layer Zero is one of the leading solution for interoperability between blockchains. You can view it as a layer below all the other layers that connects them all together, as shown below:

• Layer 2 = Polygon, Arbitrum, Optimism …

• Layer 1 = Ethereum, Bitcoin …

• Layer 0 = Layer Zero, Cosmos …

Layer Zero acheives this interoperability by providing a message passing network between different blockchains. This means a smart contract on one chain can communicate with another cross chain enabling so called “omnichain development”!

More specifically this means we can have things like tokens that exist across multiple different chains. It’s what allows your Aave tokens for example to be easily bridged from Ethereum to Polygon to Arbitrum and right back to Ethereum.

Layer Zero is not the only solution in Web3 for blockchain interoperability, but it is certainly one of the leading and most popular solutions out there.

How it works

Fundametally the Layer Zero protocol works by having an “omnichain mesh network” that connects up every chain it supports individually with one another. It does this through using a uniform and standardised message passing interface to hook up to.

This means that if for example a token on Ethereum mainnet wants to bridge 1,000 tokens to Arbitrum, then its contract on Ethereum can call “send” with the appropriate parameters and a transaction will be sent to the Layer Zero network that will route across to the contract on Arbitrum calling its “receive” function.

On success the Arbitrum contract will emit an event that gets passed back through Layer Zero to the Ethereum network and it’ll burn 1,000 tokens while the Arbitrum contract will mint 1,000 new ones! All of this is done super fast with Layer Zero guaranteeing uncensorable delivery of messages.

Below is an example, on Layer Zero’s explorer, of the Stargate dapp sending a message between the Base and Arbitrum chains to send ETH across them.

Smart contracts on either side just need then to implement certain functions fitting Layer Zero’s message passing standard. And Layer Zero have made it real easy for new tokens on the EVM to do this with their custom made “Omnichain Fungible Token” (OFT) standard that imports all the right functions for you.

Plus even if the token hasn’t natively implemented the standard, a project can still retroactively support it by creating a separate OFT contract and sending their tokens into it. It’s quite impressive how easy Layer Zero have made it to set everything up!

Blockchain Interoperability

As mentioned, interoperability is the aim of the game here as it opens up a lot of possibilities in this multi-chain world. Token bridging as I explained above is one of the most interesting use-cases but it’s not the only one.

You can see all sorts of different examples of Layer Zero being used by opening up their Protocols view where they list some of the most popular dapps, including:

• Stargate - token bridging across 13 different EVM chains.

• Merkly - built specifically to support basic interactions across 46 different chains.

• Angle - a cross-chain stablecoin protocol supporting 10+ chains.

• L2Pass - a simple minting and gas refilling game between 30+ chains.

Interoperability is such an important problem that even other blockchains have been trying to solve it for years like Cosmos and Polkadot.

Cosmos in particular has experienced a lot of growth recently thanks in large part to their SDK that makes creating new blockchains relatively easy. We’ve seen many new Cosmos based chains emerge like Celestia, Dymension, Injective and more. Importantly these chains are all interoperable through Cosmos’ “Inter-Blockchain Communication Protocol” (IBC)!

However, Layer Zero’s Protocol is more generic and will soon connect up other chains like Solana too, which is neither based on the EVM nor Cosmos SDK. This is a testament to Layer Zero’s approach being more abstract and means conceptually that some day they may be able to support practically all chains out there.

Airdrop

Last year in early December Layer Zero tweeted out promising that they are working on releasing their own token in the first half of 2024.

This is a very big protocol that’s already raised $120m at a $3bn valuation in the middle of last year, so there’s no doubt that when they airdrop a token they will make a big splash.

They’ve not explicitly said how this token will be airdropped, but based on how other big protocols have done this in the past, you can imagine that if you simply making use Layer Zero this will give you the biggest chance of getting an airdrop.

So if you want to start airdrop farming I’d suggest using Stargate and Merkly that I already mentioned, and then playing with other protocols in this list. For a more complete airdrop guide I’d recommend this one.

And to check how well you’re doing NFT Copilot has a Layer Zero airdrop checker that helps you estimate how highly you rank for the airdrop.

So best of luck if you decide to farm the Layer Zero protocol. Either way this piece of technology is setting itself up to become a really important one in Web3!