LayerZero: The Story of Bryan Pellegrino and the Rise of an Omnichain Protocol
LayerZero has emerged as one of the most highly anticipated airdrops in the first half of this year. With its concept of “omnichain” and a valuation of billions of dollars in private funding, LayerZero has been making headlines and generating excitement in the crypto community.
However, LayerZero’s journey has not been without its challenges. From initial skepticism about its valuation, to questions about its security mechanisms, to losing in the cross-chain protocol battle against Wormhole on the BNB Chain launched on Uniswap, and the lack of support from Lido for wetETH OFT (Omnichain Full-Chain Token), LayerZero has faced its fair share of controversies over the past three years.
The core team behind LayerZero consists of three highly talented graduates from the University of New Hampshire’s computer science program: Bryan Pellegrino, Ryan Zarick, and Caleb Banister. Bryan Pellegrino, in particular, has an interesting story. He started playing poker at the age of 15 and became a prodigy in the game, winning over $500,000 in total prize money. His passion for online poker eventually led him to develop an interest in computer science.
In 2013, Bryan Pellegrino stumbled upon a discussion about Bitcoin between his brother and brother-in-law. The similarities between the mining process of Bitcoin and the probabilities in poker intrigued him, and he joined his family in mining Bitcoin. However, due to the volatility and controversies surrounding Bitcoin at the time, Bryan temporarily distanced himself from the cryptocurrency world and focused on playing poker.
Despite his success in poker, Bryan felt a sense of dissatisfaction. He believed that poker was an endless game, and the pursuit of profit no longer brought him joy. After a year of traveling, Bryan returned to Vancouver and became fascinated with the concept of “baseball artificial intelligence.” He developed an AI that analyzed pitchers’ historical data to predict their pitching strategies against different batters and sold it to several baseball clubs. However, this still didn’t fulfill Bryan’s desire to do something more meaningful, and he turned back to the AI field.
Bryan’s interest in Web3 was reignited in 2020 when he noticed the launch of Binance Smart Chain (BSC). He planned to develop a game on BSC but wanted to store the game’s NFTs on Ethereum, which was more popular for NFTs at the time. This realization led Bryan to the idea of creating a protocol that could seamlessly transfer NFTs between different chains. And thus, LayerZero was born.
LayerZero’s journey from poker to cryptocurrency to AI and back to Web3 was not a smooth path. It took Bryan several years to find his true passion and purpose. In April 2021, LayerZero announced its seed funding of $2 million, but it went largely unnoticed in the market at the time. However, the team persevered, and in September 2021, they published a blog post on Medium titled “LayerZero – An Omnichain Interoperability Protocol,” which laid the foundation for the concept of omnichain in the Web3 space.
LayerZero’s achievements and potential did not go unnoticed. In May 2021, the team announced its A-round funding of $6 million led by MultICOin Capital and Binance Labs, with a valuation of $50 million. This marked an important milestone for LayerZero as it gained recognition and support from major players in the crypto industry.
In March 2022, LayerZero secured an A+ round funding of $135 million, led by FTX Ventures, Sequoia Capital, and Andreessen Horowitz (a16z), with participation from Coinbase Ventures, PayPal Ventures, Tiger Global, and Uniswap Labs, among others. This funding round valued LayerZero at an astonishing $3 billion, making it one of the highest-valued projects in the Web3 space.
LayerZero’s security and design have been subjects of debate and scrutiny. L2BEAT, in a report published in early 2023, highlighted potential risks in LayerZero’s mechanism design. The report emphasized that LayerZero’s cross-chain communication mechanism lacks the ability to restrict users from modifying contracts, which means users need to evaluate the security of each protocol themselves.
Despite the challenges and criticisms, LayerZero has gained significant traction and achieved remarkable milestones. Its flagship cross-chain product, Stargate, launched in March 2022 and quickly attracted billions of dollars in Total Value Locked (TVL). Within weeks, Stargate surpassed the TVL milestones that took other major DeFi projects months to achieve. LayerZero’s TVL growth demonstrated the market’s enthusiasm and confidence in its technology.
In addition to its funding success, LayerZero also made strides in the NFT space. In April 2022, the project introduced the “Gh0stly Gh0sts” NFT series, which could be minted on seven different chains supported by LayerZero. The NFTs gained significant attention and quickly reached high floor prices within 24 hours of launch.
LayerZero’s journey is a testament to the perseverance and vision of its founder, Bryan Pellegrino. It is a story of exploration, adaptation, and continuous innovation. From his early days as a poker prodigy to his foray into cryptocurrency and AI, Bryan’s path eventually led him to the creation of LayerZero, an omnichain protocol that aims to bridge the gap between different blockchains.
As the Web3 industry enters a period of reflection and consolidation, LayerZero stands as a shining example of the potential and possibilities of omnichain technology. Its success has attracted the attention of both established and new players in the crypto space, and it continues to make significant contributions to the advancement of Web3.
Disclaimer: This article is a creative rewrite of the original content. The general semantics and facts have been retained, but the expression and style have been modified to enhance readability and fluency.”SushiSwap Founder 0xMaki Endorses LayerZero and Stargate for Geometric Imagination”
In the world of blockchain technology, the security of decentralized finance (DeFi) platforms is of utmost importance. Recently, a debate surrounding LayerZero, a protocol for cross-chain messaging, and its security measures has been gaining attention.
L2BEAT, a platform that analyzes Layer 2 scaling solutions, raised concerns regarding the potential vulnerability of LayerZero to attacks on its oracle and relay systems. If these systems were to be compromised, attackers could steal tokens locked on the original chain without the token holders realizing it. L2BEAT suggested that the only way to prevent this scenario is to have immutable oracle and relay systems, but at the time of the report, no projects had implemented such security measures. This raises questions about the independent security of projects using LayerZero and highlights the need to investigate whether they have implemented similar protective measures against attacks.
In response to the L2BEAT report, LayerZero Labs, the team behind LayerZero, addressed the concerns raised. Ryan Zarick, Co-founder and CTO of LayerZero Labs, stated that LayerZero is simply a protocol, and how it is used is up to the users themselves. Zarick also believed that the author of the report had ulterior motives and did not individually assess the security of projects using LayerZero, instead making a blanket statement that all projects are at risk. While the discussion did not lead to substantial progress, it likely made the LayerZero team realize the importance of security.
Four months after the report was published, LayerZero launched a bug bounty program on Immunefi, offering a maximum reward of $15 million. This surpassed MakerDAO’s $10 million bug bounty program, making it the highest bounty in the Web3 space. Additionally, Bryan Pellegrino, Co-founder and CEO of LayerZero, publicly announced that the company had allocated approximately $5 million for audits in 2022.
Furthermore, the release of LayerZero V2 at the end of last year completely addressed the vulnerabilities mentioned in the report. The messaging mechanism was transformed from “oracle + relay” to “decentralized messaging + executor.” In LayerZero V2, the protocol introduced multiple trusted “DVNs” responsible for message delivery. Projects can choose multiple DVNs based on their needs to ensure support for message delivery loads and set an executor to execute the messages for cross-chain transfers. This process ensures that the messages delivered cannot be tampered with by utilizing multiple trusted intermediaries.
The dispute between Uniswap and LayerZero over the choice of a cross-chain protocol for Uniswap’s deployment on the BNB Chain is another topic worth discussing. Uniswap’s commercial source code license, which was applied for in 2021, is set to expire in April 2023. To secure a position on the BNB Chain before the license expires, Uniswap accelerated its deployment of Uniswap v3 on multiple chains. LayerZero and Wormhole emerged as the two primary competitors with significant institutional support.
To gain support, both sides actively promoted their advantages and criticized each other on forums and social media. After a period of battling, a Snapshot off-chain vote was conducted to determine the choice of the cross-chain protocol. Wormhole emerged as the winner with over 60% support. However, there was curiosity as to why a16z, holding 15 million UNI tokens, did not vote. a16z explained that they wanted to vote but their tokens were held in Fireblocks, preventing them from participating in the off-chain vote. However, they did vote against the proposal in the final on-chain vote, which caused dissatisfaction within the community. Despite the opposition, the proposal was approved with over 65% support from supporters, including Consensys and GFX Labs.
The incident highlighted the divide between investment firms and the community. From a16z’s perspective, as an investor in both Uniswap and LayerZero, it is understandable for them to support LayerZero in the absence of a clear advantage for either protocol. The community viewed a16z as an adversary, accusing them of manipulating the vote with their large UNI holdings. However, forcing support for Wormhole against a16z’s wishes could also be seen as an unfair action. a16z recognized Uniswap’s potential early on and held UNI tokens without selling them. Supporting projects they have invested in with their holdings can be seen as a logical decision. Ultimately, it is up to the readers to form their own opinions on the matter.
Another incident worth mentioning is the independent launch of wstETH by LayerZero without Lido DAO’s consent. LayerZero announced the launch of wstETH on October 26th, 2021, supporting BNB Chain, Avalanche, and Scroll. However, this announcement faced resistance from nine cross-chain projects, including Connext, Across, Celer Network, ChainSafe, Sygma, LI.FI, Socket, Router Protocol, and the Cross-chain Interoperability Alliance. The resistance stemmed from the fact that LayerZero’s actions did not receive approval from the Lido community. The projects argued that if every project could independently launch cross-chain versions of their tokens, the market would become fragmented. They advocated for projects to establish their own cross-chain token standards, fostering a competitive environment.
Following the backlash, Lido tweeted that LayerZero’s actions were not approved by Lido DAO and cautioned participants to be aware of the risks. LayerZero eventually agreed to transfer the ownership of wstETH contracts on chains other than Ethereum to Lido for management. They claimed that their decision was to support the development of the LSD project and denied any malicious intent. However, it is undeniable that LayerZero’s actions were biased, especially without explicitly stating that the token standard was launched independently without Lido DAO’s approval. Coupled with the previous incident involving Uniswap, the market had legitimate criticisms of LayerZero for a period of time.
After the incident, LayerZero started jointly announcing its support for new chains and tokens with the respective projects, adopting a more low-key approach until the news of the airdrop surfaced.
The LayerZero airdrop was open for query as of yesterday, but discussions about it began a month ago. In early May, LayerZero initiated the “Witch Hunt,” during which players who interacted with contracts specifically for airdrop purposes could voluntarily submit their “witch addresses.” If these addresses were eligible for the airdrop, the players could claim 15% of the original airdrop. The second half of the month was even more exciting, as LayerZero opened it to everyone for a “rewarded reporting” period. Successful reports of witch addresses would earn the reporters 10% of the addresses’ airdrop allocation.
Of course, LayerZero also conducted reviews and provided an appeal process in case of potential false reports. This led to a flurry of reports targeting studios, large holders, and airdrop enthusiasts, testing the limits of human nature.
Yesterday, Bryan Pellegrino, CEO of LayerZero Labs, announced that approximately 1.28 million addresses received the airdrop. This suggests that out of the initial estimated 6 million addresses eligible for the airdrop, over 4.7 million addresses were ultimately identified as witch addresses.
At some point, airdrops transformed from a way for projects to reward participants to a mandatory event. We seem to have forgotten that we should be encouraging more ideas and innovation in projects rather than constantly focusing on who will give us more money. When projects push these user-attracting tactics to the extreme, it creates a distorted atmosphere in the market:
“If you don’t give me money or if I’m not satisfied with the amount you give, you’re garbage.”
Whether or not to conduct an airdrop and the quantity of the airdrop are the rights of the project. On the other side of the world, a team is working on project proposals, seeking investments, writing code, and managing companies with the ultimate goal of creating value, not solely to make you money. Even if you argue that you have contributed to user and transaction numbers, investment firms are not foolish and can accurately assess the value of a project and how much it is worth. It cannot be determined by interacting with two contracts using a script.
The protagonist of this story, Bryan Pellegrino, is not perfect. He has experienced confusion and has switched between AI and crypto. However, beyond the project itself, he has built the first real and effective database of witch addresses, propelling the Web3 industry forward from the blind pursuit of airdrops and mindless interactions with projects.
In the future, it is expected that more projects will distribute airdrops to those who have made tangible contributions to the project’s development, rather than merely rewarding those who traded 10 USDT tokens or minted an NFT. Projects will focus more on creating excellent products rather than designing airdrop rules to satisfy a group of opportunistic individuals.
In an article published on Sequoia Capital’s official website, there is a point that was not initially mentioned but is worth noting. Bryan Pellegrino expressed his desire for “practical returns” and to excel in a particular field when he was disenchanted with the pursuit of solely making money. On LayerZero, he is living up to his ideals, whether it be through the project itself or the efforts made for the development of the Web3 industry. There may be more omnichain concepts or new ideas in the future, but the emergence of LayerZero has undoubtedly made a significant impact.
As British writer Joseph Rudyard Kipling, the recipient of the 1907 Nobel Prize in Literature, wrote in a poem dedicated to his son, “If you can keep your head when all about you are losing theirs… If you can dream—and not make dreams your master… If you can meet with Triumph and Disaster… And treat those two impostors just the same…” Let us all take these words to heart. After all, when you have created a phenomenon like MetaMask, does it really matter whether or not you conduct an airdrop?
