A Quick Overview of LayerZero's 2023 Ecosystem Projects and Development Potential
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A Quick Overview of LayerZero's 2023 Ecosystem Projects and Development Potential
The full-chain narrative is highly compelling for multi-chain interactions and advancing DeFi to 2.0.
Navigating Web3 tides with focused insightsWritten by: RightSide
Compiled by: TechFlow
The LayerZero ecosystem is where I’ve focused most of my time because I believe it will be a major player in the future of crypto. The omnichain narrative is highly compelling for enabling multichain interactions and advancing DeFi into version 2.0.
LayerZero is a protocol designed to provide composability and interoperability between chains while maintaining high security and low fees. In just seven months, it has already processed one million messages.
I believe three core capabilities give LayerZero its value:
1. Security: Transactions are only finalized when both the oracle and relayer agree on their validity, reducing malicious activity across chains.
2. Composability: Current cross-chain bridges fragment liquidity due to exclusive liquidity pools created for connecting new chains. LayerZero enables asset transfers through omnichain communication without causing fragmentation.
3. Multichain: As Vitalik mentioned, "the future will be multichain, not cross-chain," referring to the security limitations of cross-chain bridges. Omnichain Fungible Tokens (OFTs) mitigate these risks by burning tokens on the source chain and minting them on the destination chain.
This allows assets to move without relying on cross-chain bridges—frequent targets of hacks this year—and establishes a unified token standard within the ecosystem, enabling builders to innovate with less friction.
With these capabilities, the multichain future is unfolding, and several protocols built on LayerZero have already emerged and made significant impacts:
1. Stargate Finance
2. Gh0sts
3. TapiocaDAO
1. Stargate Finance enables asset transfers across different blockchains with minimal slippage thanks to non-fragmented liquidity. At its peak, it reached a TVL of $4 billion (April 6, 2022).
$STG, the first OFT, made headlines during an auction with Sam Trabucco, who claimed they acquired all available tokens.
Stargate Finance continues to scale and recently deployed on MetisDAO. Currently, users can transfer assets across seven chains, primarily stablecoins (USDC, BUSD, USDT).
Using Stargate to transfer assets is extremely user-friendly: connect -> select asset -> choose destination chain -> approve and transfer -> wait 45 seconds -> complete.
2. Gh0sts was the first omnichain NFT collection minted across all seven blockchains compatible with LayerZero. It achieved a floor price of 1 ETH within the first 24 hours of launch and secured strong business development partnerships, including with BinanceNFT and CoinbaseNFT.
Since then, the project has been relatively quiet, but as stated in their latest announcement, the focus is on empowering the community, hence no official roadmap. Additionally, only 3% of the collection is listed on OpenSea (ETH).
3. Tapioca DAO is a project I’m very bullish on for 2023. Simply put, it allows borrowing and lending assets across more than 12 chains without worrying about fragmented liquidity or needing cross-chain bridges.
$USD0 will also launch as the first omnichain stablecoin (over-collateralized like $DAI).
Imagine depositing your ETH on Ethereum and borrowing stablecoins (USD0) on Arbitrum. This isn’t possible with existing DeFi protocols today, but Tapioca DAO is making it a reality.
TapiocaDAO uses Kashi, an isolated risk market lending engine, and YieldBox (BentoboxV2) for its smart contracts.
TapiocaDAO has confirmed there will be an airdrop—but not the kind you might expect.
Eligible participants will have the option to purchase $TAP from the DAO at a discount ranging from 15% to 75% during a 36-hour Liquidity Bootstrapping Pool (LBP), rather than receiving free $TAP tokens.
In summary, LayerZero’s core technology enables seamless cross-chain transactions, solving DeFi’s trilemma of scalability. Protocols built on top of it are leveraging these capabilities and possess tremendous potential.
The future is multichain.
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