Blockchain interoperability protocol LayerZero raises $120 million at a $3 billion valuation
LayerZero Labs Inc., a cross-chain interoperability protocol startup, today announced that it has raised $120 million in new funding at a valuation of $3 billion.
The new Series B round triples LayerZero’s valuation since its last funding round of $135 million in March 2022. The round was joined by 33 investors, including the crypto arm of Andreessen Horowitz, BOND, Circle Ventures, Samsung Next, Sequoia Capital, OKX Ventures and OpenSea Ventures . Also joining the round was auction house Christie’s, which is known for selling highly valued pieces of crypto artwork.
LayerZero provides what is called a “messaging protocol” that allows decentralized applications to interoperate between multiple blockchains. The protocol platform is designed to allow trustless and configurable message delivery so developers can quickly create dapps that can run across different blockchains and still communicate.
Using LayerZero’s protocol, developers can build parts of their dapps to take advantage of the capabilities of different blockchains for certain parts of their apps. For example, a developer can use a highly scalable blockchain with low fees and high transaction rates to maintain records of fast-paced gameplay in one part of their app and use a separate, slower-running, higher-security blockchain for tracking gameplay or storing game artifacts.
“Imagine a future where a single user-facing application can leverage the speed of Solana, the security of Ethereum, and the cheap file storage of Arweave, while being completely abstracted to the user,” said Ryan Zarick, Co-Founder and Chief Technology Officer of LayerZero Labs. “The days of choosing one chain to build on are over; the future is omnichain applications.”
LayerZero’s protocol appears to solve the problem where there are many blockchains in the crypto ecosystem, each of which tends to solve different problems, but cannot communicate with each other. That has led to fragmentation, with developers choosing which blockchain to move to and locking themselves in.
There are currently other multi-chain interoperability projects in development, but LayerZero has argued that they are not up to the task. Examples include Polkadot, which is a centralized solution that uses a hub-and-spoke model, and Cosmos IBC, which uses lightweight nodes. The former may lose security and the latter becomes expensive due to Ethereum transaction fees.
The company launched in September 2021 with $6 million in funding. Since then, LayerZero’s protocol has relayed more than 2 million messages among more than 30 chains, secured $7 billion in total locked-in value, and processed $6 billion in transaction volume. According to the company, the platform has deployed more than 300,000 contracts on the testnet and 3,500 on the mainnet, with more than 10,000 unique applications and hundreds of thousands of unique users.
The company’s technology is used by some of the crypto industry’s best-known applications, including the largest decentralized crypto exchanges PancakeSwap, SushiSwap, TraderJoe and Uniswap.
Zarick compared the development of blockchain technology to the rise of the internet, noting that computers also first existed in fragmented and disconnected data centers without a distributed network system to connect them. “LayerZero revolutionizes blockchains by creating a unified ecosystem, like the internet, connecting each blockchain’s developers and user communities,” he said.
