LayerZero’s multi-chain network expands as airdrop seekers intensify their activities.

LayerZero serves as a communication framework that enables cross-chain applications. Its foundational messaging features allow for the creation of omni-chain capabilities, including decentralized exchanges, money market protocols, and various other DeFi applications that can leverage cross-chain liquidity.

The LayerZero platform was introduced in September 2021, with Stargate Finance, a cross-chain bridge, being the inaugural application developed on it. The initiative secured $261 million across three funding rounds, resulting in a valuation increase from $1 billion to $2 billion between March 2022 and March 2023.

According to data analytics company Nansen, decentralized applications (Dapps) utilizing LayerZero rank among the most frequently used entities across blockchain networks such as Arbitrum, Optimism, Ethereum, Binance Chain, and Polygon.

During the initial week of April, LayerZero-enabled applications like Stargate and Radiant Finance were the most utilized on Arbitrum and Optimism. On Polygon, Binance Chain, and Ethereum, LayerZero and its applications were positioned between 7th and 30th in terms of user engagement.

@LayerZero_Labs raised $120M at a $3B valuation$ZRO airdrop tweets going viral (again)
Data shows that LayerZero is among the top entities on Arbitrum, Optimism, Avalanche, BNB Chain, Fantom
Sharing some of the multi-chain stats below (with free/public dashboards) pic.twitter.com/HZwc4J4vuG

— Nansen (@nansen_ai) April 6, 2023

The primary driver behind the rising adoption is the speculation surrounding the native token airdrop of LayerZero. The development team has referenced the ZRO token in their source code on Github, indicating that an airdrop for early users is probable.

Mention of ZRO token in the official documentation of LayerZero. Source: LayerZero Gitbook

LayerZero ecosystem growth

Stargate Finance acts as the cornerstone of the LayerZero ecosystem. This cross-chain bridge facilitates transfers among Ethereum, Binance Chain, Polygon, Arbitrum, and Optimism with optimal liquidity and security. The total value locked (TVL) in Stargate pools is $419 million, according to DeFiLlama data, making it second only to the Multichain protocol.

The LayerZero protocol has also been employed to connect isolated ecosystems like Aptos with Ethereum, showcasing the messaging protocol’s capability to bridge incompatible ecosystems. Additionally, there is a dedicated bridge for Wrapped Bitcoin (WBTC) transfers across Ethereum-compatible blockchains.

In addition to bridges, the messaging protocol is also utilized in decentralized exchanges and lending protocols. Radiant Capital stands out as the leading lending platform developed using LayerZero’s technology. The TVL of this multi-chain market-making protocol has surged to $200 million from under $30 million at the beginning of 2023.

InterSwap and Hashflow are in the process of creating a cross-chain decentralized exchange similar to Uniswap on LayerZero. Pontem Network, a DeFi hub on Aptos, is also utilizing LayerZero’s technology to develop its range of DeFi applications, including a DEX, lending portal, and an NFT marketplace.

The growth of the LayerZero ecosystem appears to be establishing a significant competitive advantage in cross-chain applications as the airdrop excitement generates liquidity and engagement for the applications built on it.

While other cross-chain interoperable platforms are under development, LayerZero is currently benefiting from a first-mover advantage with a functional design.

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