Full-chain interoperability protocol LayerZero operating principle, advantages and risk analysis

LayerZero is a full-chain interoperability protocol (omnichain) that enables cross-chain communication between different blockchains. It provides a new way of cross-chain interaction without the need for a third-party intermediary.

Specifically, it enables all blockchains to connect to each other by creating a unified network layer, which allows communication between different blockchains to be smoother without the need for cross-chain bridges or other complex solutions. This also makes LayerZero faster and more secure than traditional cross-chain bridges.

Simply put, LayerZero is like a universal translation machine between different blockchains, making it easier to exchange assets and use different applications across multiple blockchains.

How LayerZero works

The LayerZero protocol consists of three main components, namely Endpoint, Oracle and Relayer:

Endpoint: LayerZero deploys a set of intelligence on each supported chain Contracts, these smart contracts connect all LayerZero supported chains and can be easily deployed onto new chains to include them into LayerZero’s network.

Oracle: This is a third-party service whose job is to relay data (also called block headers) from one chain to another.

Relayer: Its job is to obtain the proof of the specified transaction. It is worth noting that anyone can become a relayer according to the parameters laid out by LayerZero, which helps ensure that it is a decentralized system.

Simply put, LayerZero transmits messages between LayerZero Endpoints on different chains through Oracle and Relayer. Oracle passes the block header (the block header contains transaction information, messages, etc.), and Relayer passes the transaction proof and verifies each other. Stay safe.

Advantages of LayerZero

Speed: LayerZero is much faster than traditional cross-chain bridges. Transactions can be processed in less than a minute. Traditional cross-chain bridges may take several minutes due to mechanism issues. Even a few hours.

Security: LayerZero is a trustless protocol, which means no single entity controls the network and no third party is required to keep your funds, solving past security issues with cross-chain bridges

Scalability: LayerZero Designed to be scalable. The network can handle large volumes of transactions without any slowdown, making it ideal for dApps that require high throughput.

Potential risks of LayerZero

The security of LayerZero has not been fully verified. The assumption of trust between oracles and relayers that need to operate independently is open to question. Issues such as security risks behind the relay mechanism still require vigilance.

On the other hand, although LayerZero’s trust assumption that its security is no less than oracles in theory is relatively convincing, the key point may lie in how to achieve decentralization of relays.

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