1. Introduction

2. What is LayerZero?

3. Brief Achievements Over the Past 1.5 Years

4. How It All Began

5. The Inception of LayerZero

6. The next 1.5 years

7. The Team today

8. Ecosystem

9. Innovations from LayerZero

10. Conclusion

Introduction

Over a year and a half ago, LayerZero was a project that almost no one knew about. Projects in the ecosystem could be counted on one hand, and the technology wasn't taken seriously. Omnichain was just a word for everyone. But what's happening now? LayerZero has set record transaction values, volume, and users. There are now more than 150 projects in the ecosystem, and this is just the beginning. Every day, more and more people are using the technology, and more and more projects are integrating. So, what has changed in the last one and a half years in the project that saw a 4300% increase in users and more than a 35,000% increase in transactions?

What is LayerZero?

A brief overview for those who still don't fully understand what LayerZero is.

LayerZero is an omnichain interoperability protocol that operates through message exchange. The team is creating a new way for smart contracts and applications from different networks to interact seamlessly, allowing tokens to move between networks without difficulty.

"Our mission is to connect all smart contracts across all chains."

When transferring a token from one blockchain to another requires many unnecessary steps, demanding compromises from users (buy tokens in one network, find a bridge with suitable token liquidity, wrap/unwrap tokens, buy native tokens everywhere for gas fees), it becomes impractical. Enter LayerZero with its mission to facilitate seamless token transfer across any network. In essence, this principle is termed omnichain. Unlike other bridge solutions offering similar services, LayerZero aims to do this in an "elegant" manner, making it user-friendly and swift. LayerZero itself isn't a bridge but represents an immutable foundational layer of code upon which bridges and dApps can be built. The protocol offers a unique, user-centric approach to data unification at the application level.

When transferring a token from one blockchain to another requires many unnecessary steps, demanding compromises from users (buy tokens in one network, find a bridge with suitable token liquidity, wrap/unwrap tokens, buy native tokens everywhere for gas fees), it becomes impractical. Enter LayerZero with its mission to facilitate seamless token transfer across any network. In essence, this principle is termed omnichain. Unlike other bridge solutions offering similar services, LayerZero aims to do this in an "elegant" manner, making it user-friendly and swift. LayerZero itself isn't a bridge but represents an immutable foundational layer of code upon which bridges and dApps can be built. The protocol offers a unique, user-centric approach to data unification at the application level.

Unlike Web 2.0 messaging platforms like WhatsApp and Telegram, this message exchange protocol allows users to send various types of messages between blockchains, such as cross-chain interactions, eliminating the need for intermediaries.

"These are pure arbitrary data; it's like exchanging messages between computers over the internet, not like instant messaging," said Bryan Pellegrino to TechCrunch. "It's data movement."

Moreover, with their principle that allows dApp developers to choose their oracles and security providers, they aim to address the issue of bridge hacks, a challenge well-documented in Web3 history. Developers can choose the infrastructure that suits them best.

Brief Achievements Over the Past 1.5 Years

To briefly outline the achievements over the past years, they would look something like this:

1. From one to 150 projects in the ecosystem;

2. Project Essence;

3. Largest Bug Bounty in history;

4. Partnership and integration with Google Cloud;

5. Release of the $USDV token and the new ColorTrace algorithm - a novel approach to token coloring issues;

6. LayerZero Scan v2;

7. Final stages of developing the new Stargate V2 version;

8. New protocol version - LayerZero V2;

9. Team growth from 3 to 80 members;

10. Significant project metrics growth: valuation up to $3B, investment amount to $263M (despite an unfavorable year for investments), user count increased by 4,300%, and transactions surged by more than 35,000%;

11. Recognition of the project by almost anyone familiar with cryptocurrency.

LayerZero has amazed us with its statistics, and now we aim to astonish you with our article about these statistics.

How It All Began

When discussing how it all began, one must start with the backstory of LayerZero Labs' CEO - Bryan Pellegrino, the visionary behind it all. Most are likely familiar with Bryan's past and his numerous victories in the gambling industry, particularly in poker. He pursued this until he felt he had reached a plateau in his development. The secret of winning had become too straightforward for him. However, besides always wanting to be on top, from his childhood, Bryan Pellegrino always dreamed of creating something new and winning.

His family was unaware at the time, but these routine gambling nights shaped Pellegrino's life and means of existence.

A pivotal moment in his journey was his enrollment at the University of New Hampshire after high school. There, he bonded with Zarick and Banister, who would become lifelong friends and future co-founders of LayerZero Labs.

In 2013, the cryptocurrency world caught Pellegrino's attention, and the trio ventured into it, although initial setbacks made them reconsider. By 2016, deeply engrossed in Ethereum, Pellegrino, with his connections and alongside an engineer from a16z, embarked on the OpenToken project, launched in 2018 and subsequently sold. Their focus then shifted towards AI.

In the summer of 2020, after the trio and Noam Brown from Facebook AI introduced a scientific paper on the new poker AI "Supremus", they revisited the crypto sphere. That same year, with the emergence of BSC, Pellegrino took interest and began developing a game on this new chain. Winning gladiators in the game turned into Ethereum-based NFTs. However, transferring NFTs between chains posed challenges due to vulnerabilities in existing bridges. This challenge sparked an idea in Pellegrino's mind – the need for a foundational code layer for a secure bridge between blockchains, enabling the movement of not just "wrapped" cryptocurrencies but also NFTs and other data. The primary objective was to facilitate basic message exchange across different blockchains, laying the groundwork for LayerZero.

The Inception of LayerZero

Pellegrino emphasized the need for basic message exchange – the simplest informational elements – across various blockchains. What tool could provide such universality for data movement across all types of chains? Pellegrino identified a grand project, one that could yield dividends surpassing even poker. The trio, now known as the co-founders of LayerZero Labs – Bryan Pellegrino, Ryan Zarick, and Caleb Banister – realized that a foundational code layer, rather than just a bridge, was essential for the task. Existing multi-chain bridges only facilitated the transfer of "wrapped" cryptocurrencies, overlooking NFTs and other data types.

Formally establishing LayerZero Labs in February 2021, the team published the document "LayerZero: Trustless Omnichain Interoperability Protocol" in May of the same year, introducing their open and free protocol that facilitates direct transactions across different blockchains. The project was never positioned as commercial, but that didn't halt their progress. Pellegrino managed to collaborate with 0xMaki himself, the co-founder of SushiSwap, after he departed from DEX. Naturally, this marked the beginning of significant growth since partnering with 0xMaki implies having vast connections and business opportunities for their project.

Pellegrino expressed excitement about 0xMaki joining the team on Twitter, capturing the attention of Sequoia partner, Michelle Bailhe. Bailhe and her colleague Maguire saw in LayerZero a solution to a significant problem, akin to past standardizations like the creation of TCP/IP for the Internet. After meeting Pellegrino, he left an impression on Sequoia with the clarity and candor of his vision during discussions, showcasing a genuine desire to forge mutually beneficial relationships to address a complex issue.

In March 2022, Pellegrino, Zarick, Banister, and others launched the demo version of Stargate, which remains in use today. Within the first ten days, the platform processed transactions exceeding $250 million, sparking interest from various applications. This marked a clear success. Their inbox was flooded with partnership offers, and since then, we have all been publicly observing the development of LayerZero.

The next 1.5 years

Over the next 1.5 years, we witnessed the growth of LayerZero. After the launch of Stargate and the announcement of a Series A funding round of $135M in late March, LayerZero became widely recognized, with news outlets buzzing about the energized team. However, this was just the beginning.

Despite the challenges of 2022, LayerZero Labs steadily progressed towards its goal and developed its product. Following the Series A news, the project didn't immediately gain extensive coverage from the crypto community. Within the subsequent 7 months post-launch, the ecosystem of LayerZero saw its first million transactions. But that milestone was just the beginning. After that, each subsequent million transactions came faster than the last, breaking previous records. You can track this through our tweets:

• 1,000,000 processed messages on layerzeroscan.com - November 19, 2022 (7 months)

• 2,000,000 - February 8, 2023 (2.5 months)

• 3,000,000 - April 2, 2023 (just under 2 months)

• 4,000,000 - April 8, 2023 (6 days 🤯)

• 5,000,000 - April 12 (4 days)

• 6,000,000 - April 16 (4 days)

• 7,000,000 - April 20 (4 days)

• 8,000,000 - April 26 (6 days)

• 9,000,000 - April 30 (4 days)

• 10,000,000 - May 5 (5 days)

This trend persisted until around the end of May when the 17th million was achieved in just 2 days, and subsequently, this pattern repeated every 2-3 days. As summer approached, we observed peak activity, with 1M transactions occurring daily.

Based on this, it can be said that the project gained significant traction within the community in April 2023 when an additional $120M was invested in a Series B round.

After this announcement on April 2, as shown in the screenshot below, the daily transaction count, according to Dune data, skyrocketed.

As many might recall, not long before that, in March, Arbitrum released its token with a distribution in the form of an airdrop. Whether it was a marketing move or a mere coincidence remains unknown, but it's logical to assume that such large funding rounds aren't organized instantly but are planned at least 2-3 months in advance, especially when the exact release date of Arbitrum's token was unknown.

Interestingly, the LayerZero Series B funding round was the largest for Q2 2023 and among the largest in the past six months. This is significant, considering the bearish trend observed throughout 2022 and early 2023, with diminishing valuations of crypto projects and smaller investment amounts from venture capital firms. This further underscores the trust venture capital firms have in the LayerZero Labs team and their product.

Strictly speaking, according to Bryan Pellegrino, such a significant funding round for the LayerZero Labs team wasn't essentially needed for the development of their product since they already had sufficient resources. Primarily, this money was raised to expand the company into the APAC region and explore new opportunities for growth.

“We wanted to make a push into gaming and the APAC market, and all of this [capital] is largely to grow the company there,” Pellegrino said. “If we want to be that layer that connects everything, gaming plays a huge role in that.”

Summer has passed, and activity within the ecosystem has declined. Throughout the autumn, we observed a downward trend in activity. However, to be fair, current metrics still remain significant compared to what was a year ago or what's happening in ecosystems of other protocols in general. For insights, you can read our recent analytical threads on Twitter:

• Comparison of LayerZero, Axelar, and Across.

• Comparing LayerZero's peak activity to its current state.

Additionally, over the recent months of autumn, we've witnessed a lot of FUD within the community and other protocols. One recent example is a unified Call for Open Bridges Standards, which emerged after news of the integration of the OFT standard for Lido Finance without a DAO vote.

Nevertheless, the project continues its steady development, announcing new partnerships, releasing updates, and technologies day by day. Throughout the autumn:

• 33 projects were integrated.

• Support for 14 new networks was added.

• Approximately 19M messages were processed.

• ColorTrace and $USDV were launched.

• LayerZeroScan v2 was updated.

Furthermore, in December, we received a series of exciting updates from the team: on December 1st, we were informed by Bryan Pellegrino that Project Essence has already been launched and successfully adopted by Google. Then, the team announced plans for the $ZRO token in Q1-Q2 2024. Lastly, last week, the team unveiled a new version of the protocol - LayerZero V2, with the Mainnet scheduled for January 2024. Therefore, we can expect a plethora of updates in the near future!

The Team today

According to LinkedIn data, the LayerZero Labs team currently consists of 80 members. As we recall, the project was initially founded by three individuals:

• Bryan Pellegrino - co-founder, CEO, and the brain behind the entire LayerZero idea. From being a top poker player and AI creator to founding one of the most significant crypto projects for the future.

• Ryan Zarick - co-founder & CTO of LayerZero Labs and a close friend of Bryan since their time at the University of New Hampshire.

• Caleb Banister - co-founder of LayerZero Labs and also a close friend of Bryan, along with Ryan Zarick, since their days at the University of New Hampshire.

Together, the trio had extensive experience in launching their projects, as evidenced by their LinkedIn profiles. One of their main contributors is 0xMaki, who serves as the leading business development. However, detailed information about 0xMaki is scarce since he is a semi-anonymous angel investor and DeFi developer. He was once a core contributor and founder of one of the most popular DEXs currently, SushiSwap.

Apart from them, some key members of the team include:

• Ari Litan - COO & Strategic Advisor

• Irene Wu - Head of Strategy

• Richard Dietrich - Head of Talent

And others. Currently, the team comprises around 80 individuals, and you can view more details here and here.

There's a lot to delve into regarding team members. However, what stands out is that throughout our growth alongside the LayerZero Labs ecosystem, we've frequently witnessed news of new team members joining with impressive backgrounds. Bryan Pellegrino has often expressed on his Twitter that they probably have one of the best teams in crypto.

It’s always one of the biggest challenges of building a company. Surround yourself with the most amazing people you know and convince them to come work on hard things with you.

Innovations from LayerZero

Beyond the protocol and bridge technology that are commonly associated with LayerZero, there are several other intriguing developments that represent promising innovations.

1. Testnet Bridge - was unveiled in February 2023, nearly a year ago, and stirred significant excitement within the crypto community. Many believed it would kill GoerliETH and hinder developers on the Testnet. However, over time, its positive impacts became evident. Nowadays, mentions of the Testnet Bridge are less frequent.

2. Project Essence - has been one of the most discussed topics recently. Introduced in April 2023, this technology for network validators has garnered substantial interest. It allows for the deployment of a validator (Oracle & Relayer) in just one hour. Previously, this process took several months and required a large team and resources. The Mainnet launch is scheduled for early 2024, with Project Essence set to introduce Tapioca's Genesis Update and PearlNet on February 24, 2024.

3. Largest Bug Bounty in History - while not strictly a technological innovation, it represents the largest Bug Bounty for LayerZero and Stargate, each allocated with $15M. Security remains paramount.

4. ColorTrace Algorithm and Verified USD - perhaps not what many anticipated, but it genuinely caught crypto enthusiasts off guard. The token coloring issue has long been recognized, with some proposed solutions from figures like Vitalik Buterin, Yoni Assia, and others. However, LayerZero Labs recently introduced a first practical and flexible approach. In conjunction, they launched the $USDV token, a native omnichain stablecoin available across five chains and several dApps, including Stargate.

5. Another notable update is the second version of LayerZero Scan V2. This updated version expands on the capabilities of its predecessor, offering more tools for tracking and analytics within the ecosystem, providing statistics on protocols and ecosystem projects.

6. Lastly, a recent update that stands out as perhaps the most significant among all mentioned is LayerZero V2. This protocol's new version, with its enhanced capabilities and the rectification of most V1 shortcomings, essentially introduces a new and flexible security paradigm.

Ecosystem

Currently, the ecosystem boasts over 150 projects, and its size continues to expand each month as projects from the crypto industry eagerly integrate with LayerZero day by day. Just a year ago, the ecosystem had approximately 20 projects, some of the most promising of which include Angle Protocol, Gh0stly Gh0sts, Omni X, Omnisea, Holograph, Cashmere Labs, TapiocaDAO, Mugen, Reunit Wallet, WOOfi, and SushiSwap.

In one of our early infographics from January 2023, excluding official products, networks, audit partners, one can identify 19-20 projects that are still active and support the growth and technology of LayerZero.

Currently, this infographic showcases over 150 projects that either partially or fully utilize LayerZero.

1. DEFI Category: Prominent examples encompass SushiSwap, Pendle, OmniBTC, Angle Labs, Tapioca, TraderJoe, MIM, among others.

2. INFRASTRUCTURE Category: ZkLink, and within this infrastructure realm, one can mention Polyhedra with their zkLightClient and Google Cloud.

3. NFT Category: Holograph & OmniX stand out as early adopters.

4. GAME NFT Category: Notable games include DFK with its LayerZero-based gaming infrastructure, as well as Shrapnel and Nine Chronicles.

5. NAME SERVICE Category: Star Name Service and its derivative products.

6. BRIDGE Category: Significant bridges feature Testnet bridge, Aptos bridge, and BTC bridge.

7. DEX Category: Cashmere Labs, currently in testnet, Dexalot, Cedro Finance.

8. LAUNCHPAD Category: OmniSea (OGs) and Dappad Launchpad.

9. WALLET Category: The Reunit wallet, under active development by a former LayerZero developer.

10. MARKETPLACE Category: AllSpark and TofuNFT, with a recent integration being Magic Eden, a renowned Solana marketplace.

11. NFT COLLECTION Category: Active collections within the ecosystem comprise Omni Elements, Pudgy Penguins, Kanpai Pandas.

12. AI Category: A relatively recent category featuring two participants - AIT Protocol and OrboFi.

Official Products from LayerZero Labs:

• Stargate Finance

• Aptos bridge

• BTC.b bridge

• Testnet Bridge

• Verified USD ($USDV)

Additionally, the LayerZero protocol currently supports 47 chains on Mainnet and 54 chains on Testnet.

The list of projects officially confirmed and supported by the LayerZero team is available on their official website:

As of now, they count 80 such projects.

Conclusion

With this article, we wanted to summarize the development of the LayerZero Labs ecosystem roughly since they launched Stargate. The company was founded in February 2021, and the peak of their development was most evident in 2023. Currently, the project boasts one of the largest ecosystems, one of the best teams, and some of the highest activity metrics in the crypto industry. And there's so much more to look forward to, not just in the upcoming 2024, as LayerZero is a story set to unfold over the next 10 years.

Sources

https://medium.com/layerzero-official

https://www.forbes.com/sites/ninabambysheva/2022/03/30/sequoia-ftx-ventures-and-a16z-lead-135-million-investment-in-crypto-firm-breaking-down-barriers-between-blockchains/

https://www.sequoiacap.com/article/bryan-pellegrino-spotlight-layerzero/

https://www.sequoiacap.com/article/new-partnership-the-legend-of-layerzero/

https://techcrunch.com/2023/04/04/blockchain-messaging-protocol-layerzero-raises-120m-hitting-3b-valuation/

https://www.binance.com/en/feed/post/51812

https://www.youtube.com/watch?v=bQckjGD0jkE

https://techcrunch.com/2023/07/05/crypto-funding-drops-fifth-straight-quarter/

https://dune.com/cryptoded/layerzero

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