The market is bad, and it could get worse before getting better. However grim it is, we need to move forward, learn from our collective mistakes and build a promising future rather than living in the past. There are projects in the market that strive to push forward the potential of composability, multichan and unified liquidity in DeFi, LayerZero is a typical example. LayerZero is a blockchain interoperability infrastructure that has innovated a design for cross-chain communications to power trading, lending/borrowing, as well as liquidity provisioning. This article will pick several exciting projects built with LayerZero, and explore the potential they could bring to DeFi.
In addition to its flagship product - Stargate, several notable projects, including SushiXswap and Hashflow, integrated LayerZero's infrastructure to provide cross-chain applications. Let's have a look at how these adoptions perform starting from Stargate.
When we covered Stargate in March, $STG had no value accrual. The community has passed a proposal for a value accrual mechanism to $STG stakers in July. Each non-STG transfer through the Stargate protocol will incur a total 6 bps fee and distribute to:
- Protocol Treasury: 4bps
- veSTG (the locked version of $STG) Holders: 1bp
- Liquidity Providers: 1bp
Fees are now accruing to veSTG. Total revenue accumulated by the protocol now reaches $1.2M, and the daily fees grow in tandem with the increasing transactions.
Trades on Hashflow are purely relying on market makers, traders execute transactions based on the price quoted by off-chain market makers with transactions settled on-chain. Since prices are sourced directly from market makers, there is no slippage, bridgeless, and no impermanent loss for liquidity providers. However, this introduces counterparty risk.
Given the current drama, and the awareness of the custodial risk of centralized exchanges for both traders and market makers, it is possible that both traders and market makers will both turn their activities more to DeFi.
Rage Trade's liquidity solution
Rage Trade allows users to deposit yield-generating assets, such as Liquidity providers positions in AMMs, money markets, and derivates markets across various blockchains into Rage Protocol to serve as a source of liquidity.
This project is in the early stage and is now only deployed on Arbitrum, the function to connect with other chains using LayerZero is still in development, and no token announced at this moment.
This article only covers three, in my opinion, the most interesting projects built on LayerZero. There are several other projects leveraging LayerZero' s technology to build cross-chain applications, such as Radiant Capital, OmniBTC, and Cedro Finance, most of which are in very early stages.
A non-comprehensive list of LayerZero's ecosystem:
- Radiant Capital: Multichain Lending Protocol
- OmniBTC: DEX+Lending+Bridge, connect to Bitcoin network
- Cedro Finance: Multichain Lending Protocol
- MugenFinance: Cross-chain RealYield
- InterSwap: Multichain DEX
- CashmereLabs: Multichain DEX
- holographxyz: Multichain NFT Marketplace
- OmniX_NFT: Multichain NFT Marketplace
LayerZero opens possibilities for innovative designs of cross-chain applications, and what could be built is only limited by the imagination of builders. In the future, users should not notice which chain they are using; instead, they can just use one dApp that connects each and every chain with unified liquidity.