LayerZero Describes Itself As

LayerZero is an omnichain interoperability protocol developed by LayerZero Labs. It enables lightweight, secure, and trustless message passing across multiple blockchain networks. Often referred to as a “blockchain of blockchains,” LayerZero facilitates direct communication between different blockchains, supporting seamless and efficient cross-chain transactions.

Project Utility/Function

LayerZero's primary function is to ensure secure and reliable cross-chain communication. It achieves this through several innovative features:

• Ultra Light Nodes (ULNs): Smart contracts deployed on each blockchain that act as endpoints for cross-chain communication. ULNs verify transactions using block headers and transaction proofs, ensuring the security and efficiency of the messaging process.
• Generic Messaging: LayerZero supports a wide range of cross-chain communications, including function calls, data exchanges, governance votes, and NFT transfers, allowing developers to build versatile omnichain applications.
• State Sharing: This feature allows applications to synchronize their data and logic across multiple blockchains without relying on centralized servers or databases, offering a seamless user experience.
• Instant Finality: Cross-chain transactions are confirmed as soon as they are included in a block on the source chain, eliminating waiting periods and enhancing usability.

LayerZero supports various blockchains capable of running smart contracts, including Ethereum, BNB Chain, Avalanche, Polygon, Arbitrum, Optimism, and Fantom, as well as non-EVM chains like Aptos.

Security and Validation

LayerZero employs a dual mechanism for ensuring security and validation in cross-chain communications:

• Oracle: Forwards block headers from the source chain to the destination chain, contributing to network security.
• Relayer: Submits transaction proofs to the ULNs on the destination chain, delivering messages between different blockchains. Both the Oracle and the Relayer are incentivized through fees paid by users initiating cross-chain transactions.

Token/Token Utility

The ZRO token will serve several key functions within the LayerZero platform:

• Governance: ZRO will act as a governance token, allowing holders to influence the future development and direction of the protocol.
• Utility: ZRO will be used as a utility token to facilitate transactions and interactions across different blockchain networks, enhancing the user experience and streamlining operations.

The introduction of the ZRO token aims to further decentralize the protocol and foster community involvement in its development and governance.

About the Founders

LayerZero Labs was founded in 2021 by Bryan Pellegrino, Ryan Zarick, and Caleb Banister:

• Bryan Pellegrino (CEO): Holds a PhD in Computer Science from Carnegie Mellon University, specializing in game theory and artificial intelligence.
• Ryan Zarick (CTO): Former software engineer at Google and co-founder of Predictive AI, a machine learning startup acquired by Facebook in 2019.
• Caleb Banister (Principal Engineer): Former software engineer at Facebook and co-founder of Predictive AI. He holds a BS in Computer Science from Carnegie Mellon University, with a focus on game theory and artificial intelligence.

Investment and Financial Backing

LayerZero Labs has secured substantial financial backing from prominent investors in the crypto space, including a16z, Sequoia, Paypal Ventures, Polygon, Coinbase Ventures, Binance Labs, DeFiance Capital, Spartan Group, Sino Global Capital, and Multicoin Capital. The company raised $135 million in a Series B round in March 2022 and an additional $120 million in April 2023.

Risks of ZRO

Like an investment in other crypto assets, there are some general risks to investing in ZRO. These include:  (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to the Risks Specific to Holding Digital Assets statement.

In addition to these general risks, an investment in ZRO is subject to the following specific risks:

• The omnichain/layer 0 space continues to grow more competitive. Several new blockchains continue to emerge which boast high-profile teams, claim unparalleled transaction speed, energy-efficiency, as well as developer-friendly programming languages. Any potential success associated with ZRO is reliant on the extent to which LayerZero is adopted by enterprises and developers.

We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with ZRO. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.

The ZRO community and LayerZero founding team are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of ZRO have no recourse to the ZRO community, ZRO founding team, or Uphold if ZRO declines in value for any reason.

Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.

Uphold’s Evaluation Process

Prior to listing ZRO on the Uphold Platform, Uphold performed due diligence on ZRO and determined that ZRO is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following: 

• The creation, governance, usage, and design of ZRO, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community. 
• The supply, demand, maturity, utility, and liquidity of ZRO.
• Any marketing materials put forward by the ZRO social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
• Material technical risks associated with ZRO, including any code defects, security breaches and other threats concerning ZRO and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
• Legal and regulatory risks associated with ZRO, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of ZRO.