What Projects are in the LayerZero Ecosystem?
The LayerZero ecosystem includes bridges and DeFi projects including SushiSwap, Stargate, Radiant Capital, and Trader Joe. These projects use LayerZero to overcome multichain challenges, such as liquidity fragmentation.
Key Takeaways
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LayerZero has developed an interoperability protocol that runs an Ultra Light Node (ULN) and leverages decentralized oracle networks and relayers to send messages between two distinct blockchain network endpoints
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This technology opens up several opportunities for blockchain networks and applications built on them. Applications deployed on multiple chains can benefit greatly from a solution that enables them to unite the several networks on which they operate.
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Projects like these are already exploring the possible ways of putting LayerZero’s solutions to proper use. Such projects include multichain decentralized exchange SushiSwap, Avalanche’s Trader Joe, and liquidity transport protocol Stargate Finance.
What projects would you expect to dominate an interoperability protocol’s ecosystem? Interchain interaction applications, of course. LayerZero’s technology is powering the flexible transition of assets and resources between blockchain networks. We’ve already taken an in-depth look at LayerZero, which enables communication across separate blockchain networks.
At the time of writing, Dune Analytics reports that over 1.8 million blockchain enthusiasts have interacted with the LayerZero protocol. While this growth is mostly due to LayerZero’s utility and the need to interact with different networks, another significant factor is airdrop hunters interacting with the protocol with the hopes of benefiting from a prospective LayerZero airdrop.
In this article, we’ll look at projects on LayerZero’s ecosystem and how they are putting LayerZero’s technologies to use.
Bridges
In addition to external projects using LayerZero's interoperability protocol to develop their asset-bridging platforms, LayerZero is also collaborating with other projects to develop bridges for various blockchains. Here are some of the LayerZero partner bridges.
Aptos Bridge
Aptos launched in October 2022 with the Aptos token (APT) as the native currency of the network. Aptos commanded significant fame, mainly because of the unique technology it used and its connection with the failed Diem project by Facebook, as Aptos’ modified Move language was initially developed for the Diem blockchain.
At the time of writing, Aptos sits at over $1.7 billion in market capitalization and DefiLlama reports that about $48 million worth of assets have been locked on the network, making its ecosystem a significant one. However, Aptos is not EVM-compatible, and this is where LayerZero comes in. The LayerZero Aptos bridge was launched shortly after the main network mined its genesis block, connecting Aptos with other EVM-compatible networks and even the Ethereum network.
Through the Aptos bridge, users can bridge supported assets between Aptos and other networks like BNB Smart Chain (BSC), Avalanche, Polygon, Ethereum, and Ethereum Layer 2 networks like Optimism and Arbitrum. From information on the platform, the bridging process is expected to take 2-5 days.
LayerZero Testnet Bridge
Unlike most other testnet applications, the LayerZero testnet bridge has already assumed some real relevance. Popularized by the Goerli testnet to the Ethereum mainnet bridge, the LayerZero testnet bridge connects two relatively different and very important networks. The testnet bridge delivers a look into what LayerZero hopes to achieve with its interoperability technology – the ability to bridge assets to any network (testnet or mainnet) and direct cross-chain swaps powered by Automated Market Makers (AMM).
In this case, Goerli ETH can be swapped for mainnet ETH. The interoperability protocol handles the cross-chain transfer of assets while the AMM executes trade requests using the liquidity pool from the networks involved. Goerli ETH is served from Uniswap pool on Goerli Testnet and ETH is served from Uniswap pools on their network. Goerli ETH has gained real value thanks to the LayerZero bridge.
As a side note, you can also support the platform by adding liquidity on any of the networks. Per reports, the Goerli Testnet is being deprecated and Goerli ETH can be obtained for free on faucets. This article doesn’t endorse the active trading of testnet tokens.
LayerZero USDC bridge.
According to CoinGecko, USDC sits at over $28 million worth of stablecoins. But unlike the rival USDT, USDC is mostly concentrated on the Ethereum blockchain and bridged to other EVM-compatible networks. In partnership with CirclePay – the issuer of USDC – LayerZero is experimenting with a USDC bridge powered by Ominichain Fungible Token (OFT) technology. Ominichain tokens are practically non-native and can be transferred to other networks without changing their form.
In contrast to tokens bridged by contemporary bridging techniques, Ominichain tokens are ‘transferred’ in their original forms and users are sure of the bridging process reaching finality. This is what LayerZero and CirclePay hope to achieve with the USDC bridge. The USDC bridge is in its testnet phase at the time of writing (testing has been paused). Pending public launch, USDC holders could discover a better way to move their USDC between networks.
LayerZero BTC.B bridge
BTC.B was originally created by Avalanche to connect the network to the core Bitcoin blockchain. As reported, over 2,700 BTC has been bridged to the Avalanche network through the core application and BTC.B token. Avalanche has announced that they are working with LayerZero to convert BTC.B to an Omnichain Fungible Token to make this bridged asset available in its original form on even more networks. The LayerZero BTC.B bridge is now live and can serve transfers to supported chains. BSC, Optimism, Arbitrum, Polygon, and Aptos are some of the supported networks.
Stargate Finance (STG)
Stargate Finance is currently the flagship platform on LayerZero. Stargate is a constituted bridging platform developed using LayerZero’s interoperability technology. Stargate enables blockchain enthusiasts to move assets across chains in their original form with assured finality.
This is done through Stargate’s use of a unified pool system to serve transfer requests across supported chains. Liquidity providers stake their assets on Stargate’s single-asset pool and receive staking rewards in stablecoins, which are generated from fees paid by users bridging assets on the platform.
The bridge currently supports about 8 networks including Layer 2 vertical scaling solutions like Arbitrum and Optimism. The omnichain technology provides a layer for supported tokens to seamlessly run and move across other chains. Stargate Finance offers cross-chain swaps as well, where users can send an asset from the source network and receive and receive another asset on the target chain.
Data from the project’s page claim that over $400 million worth of assets have been locked on the platform. This reflects the liquidity of the pools that serve bridging requests. The Stargate token (STG) is the native token of the Stargate ecosystem and serves reward and governance purposes. Liquidity providers can stake their LP tokens and earn additional rewards in STG tokens.
To contribute to the project’s governance, STG holders must stake their tokens on the governance portal to receive VeSTG. This is used to vote on improvement proposals. STG is actively trading on centralized exchanges and decentralized exchanges. See active trading pairs for STG token.
Trader Joe
Trader Joe started off as a native decentralized exchange on the Avalanche network but has since then deployed on other EVM-compatible networks: Arbitrum and BNB Smart Chain. DefiLlama reports over $100 million in TVL for the platform.
Joepegs, an NFT marketplace developed by the project team, is also part of the Trader Joe ecosystem. This ecosystem is unified by the JOE token, which fuels Trader Joe’s incentivization and governance structure.
Like the project itself, the JOE token is also multichain. To simplify the transfer of its native token across other chains on which the dex is deployed, Trader Joe has adopted LayerZero’s technology to transform the JOE token into an Omnichain fungible token.
The Trader Joe omnichain bridge supports Arbitrum, BSC, and Avalanche at the time of writing, and the JOE token is the only supported asset.
Learn more about Trader Joe's Liquidity Book technology.
SushiSwap
SushiSwap is a multichain decentralized exchange powered by AMM. It claims to have over 400 crypto assets available for instant decentralized swaps. Over $500 million worth of crypto assets are locked across its liquidity pools and it has served over $300 billion in trade requests. These stats were obtained from the project’s official website and are valid at the time of writing. Its governance and reward system is furnished by the SUSHI Token.
In July 2022, SushiSwap announced the launch of SushiXSwap. The new platform is being developed with LayerZero’s interoperability technology to combat the pain points of multichain DeFi application usage. In the announcement, SushiSwap reflected on the major issues affecting cross-chain interaction facilities and how it is deploying LayerZero’s technologies to solve this. At launch, SushiXSwap supports bridging of assets across Ethereum, Fantom, and about 5 other networks.
LayerZero’s technology enables SushiSwap to develop a unified liquidity system that pools together resources across supported networks to satisfy asset transfers and ensure that these transactions are finalized in the least possible time. As an already existing liquidity pool project, SushiSwap leverages its liquidity pools to fuel the bridges across the chains where the project exists, solving the liquidity fragmentation problem.
SushiSwap also tackles the fee structure on asset bridges by offering users the cheapest route for cross-chain transfers. This cost-effective solution utilizes Stargate Finance’s bridge infrastructure to source the least expensive route to transfer assets from the source chain to the target chain. SushixSwap will also use Stargate’s facility to scale its bridge and grow over time to other networks. Cross-chain swaps are also possible on SushiXSwap.
Radiant Capital (RNDT)
Decentralized lending solutions are challenging centralized alternatives with a seamless on-chain borrowing system and an accompanying incentivization and governance design that create a user-centric approach to lending. But these platforms are rigid and restrictive. Lending and borrowing are one-directional on lending platforms. That is, users are limited to lending or borrowing assets from one network and must bridge assets to another network if they must interact with it on the lending platform.
Radiant Capital is adopting LayerZero’s interoperability technology with the aim of creating a freely-run money market where users can lend and borrow assets without being restricted to one network. On Radiant Capital, users can deposit collaterals on one chain and borrow another asset on a different chain. It adopts the omnichain technology to deliver a free-running lending system for blockchain enthusiasts.
Radiant Capital also runs a bridging facility. This is also powered by the omnichain technology from LayerZero.
At the time of writing, Defilama reports over $265 million in TVL for Radiant Capital. Supported chains are Arbitrum and Binance Smart chain. The Radiant token (RNDT) is the native token of the Radiant capital. It is used in the governance portal and to reward liquidity providers on the Dynamic Liquidity Pool (DLP). RNDT is actively traded on several centralized and decentralized exchanges. See active RNDT trading pairs.
Pendle Finance
Pendle Finance allows you to purchase crypto assets at a discount. Up to 13% discount is offered on Ethereum purchases at the time of writing. Pendle derives the discounts from calculated yields and lets you purchase the token at the principal price. The principal price is the price at which the asset trades on other platforms minus the calculated yield. The purchased asset and the yield can be fully redeemed upon the estimated yield maturation time, although both can be traded during this time. CoinGecko reports over $80 million in TVL for Pendle Finance.
A discounted purchase on Pendle finance is basically staked for the maturation period and yields are calculated, this is the Principal Token (PT). Users can improve their income by staking the principal token.
PENDLE is the native token of Pendle Finance. It is used as a reward token for platform users and also used to run the project’s governance. Holders can stake PENDLE on the governance portal to receive VePENDLE. VePENDLE is used to vote on proposals. Pendle introduces a cross-chain governance system developed using LayerZero’s interoperability technology. VePENDLE holders can vote from any of the supported chains and use the governance tokens to boost their income regardless of the chains.
Other Projects to Check Out
Here are some additional projects utilizing LayerZero’s technology.
Angle Protocol
Angle is a multichain decentralized stablecoin project working on developing a platform that allows anyone to create stablecoins pegged to any asset, which are known as agTokens. Angle’s stablecoin solution is currently deployed on Ethereum, Polygon, and Layer 2 networks Optimism and Arbitrum. The Angle protocol ecosystem is furnished by the native ANGLE token used in the project’s governance and user incentivization.
Stablecoins like ones developed using Angle protocol need sufficient liquidity across every chain they are deployed on and also an efficient interoperability protocol to enable easy transition of assets between the chains. As a solution, Angle protocol has adopted LayerZero’s omnichain technology as conveyed in an announcement made in August 2022. Angle protocol will transform its flagship stablecoin agEUR into an Omnichain Fungible Token (OFT) to allow seamless transfer across networks on which the protocol is deployed. Cross-chain agEUR transfers can be done on the official bridge powered by LayerZero.
Rage Trade
Rage Trade is a perpetual contracts trading platform deployed currently on Arbitrum. Rage Trade aims to develop the “most Liquid ETH perp” through its recycled liquidity algorithm. How this works, users can provide liquidity on AMMs like Uniswap and Balancer, money markets like Aave and Euler, derivatives like GMX, and recycle their LP shares into Rage Trade’s vaults. The recycled liquidity earns extra rewards for the LP providers and boosts the platform’s liquidity.
Rage Trade is using LayerZero’s interoperability protocol to develop an Omnichain recycled liquidity algorithm. This extends the reach of the recycled liquidity system and liquidity providers on AMMs across supported networks to easily recycle their LP into the Rage Trade vault.
TofuNFT
TofuNFT is a multichain NFT marketplace deployed on over 20 blockchain networks. NFT enthusiasts can list their NFTs on supported networks for sale on TofuNFT’s marketplace and also collect artworks from other NFT creators. TofuNFT makes the list of LayerZero ecosystem for developing a marketplace for omnichain NFTS
Omnichain NFTs, just like Omnichain Fungible Tokens (OFTs), are non-native NFTs that can be easily transferred across different networks in their original form. TofuNFT’s omnichain marketplace has already received a handful of omnichain NFTs listing such as the LayerZero punks with a floor price of 0.015ETH at the time of writing.
Tapioca DAO
Tapioca is another lending protocol utilizing LayerZero’s technology to develop a multichain decentralized lending protocol. LayerZero’s technology allows Tapioca to pool resources from different networks, allowing for unified liquidity and seamless services to users. Lenders and borrowers can deposit funds and collateral from any network and lend assets from another network. Tapioca also runs USDO, an omnichain stablecoin pegged to the US dollar. USDO is an OFT and therefore can be transacted across different networks easily.
The Tapioca ecosystem is furnished by the TAP token. TAP tokens can be locked up on the governance portal to obtain VeTAP, this can be used to vote on proposals.
Final thoughts
Blockchain technology needs an interoperability protocol that truly works. One that is able to fuse the ever-growing count of blockchain networks. LayerZero is working on this and has already delivered prototypes and completed products that are meant to serve existing and new projects that hope to operate on multiple networks.
It is therefore no surprise that multichain projects and decentralized finance projects dominate its ecosystem. These projects illustrate LayerZero’s technologies’ performance in a realistic environment, while also giving the developers a chance to discover the strengths and weaknesses of the protocol and improve in needed areas. Beyond the projects mentioned above, there are also other others you can check out on the official LayerZero Twitter.
Provided its solutions continue to function as they claim, the LayerZero ecosystem is bound to grow even larger as more projects adopt the refined interoperability solution.
With rumors of the LayerZero airdrop, cryptocurrency investors are investing in related projects and exploring the LayerZero ecosystem. That said, before choosing to invest in any project, always remember to do your own due research and invest only in projects that you believe in. Finally, this article is intended for educational purposes and should not be taken as financial advice.
Joel is deeply interested in the technologies behind cryptocurrencies and blockchain networks. In his over 7 years of involvement in the space, he helps startups build a stronger internet presence through written content. He is the founder of CryptocurrencyScripts. Follow the author on Twitter @agboifesinachi
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