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The multi-chain future, where users of blockchain technology no longer have to choose only one platform, is approaching rapidly. LayerZero, an omnichain interoperability protocol, has completed a Series A+ funding round.
LayerZero raises $135 million at a $1 billion valuation
Forbes reports that the funding round was co-led by Sequoia Capital, Andreessen Horowitz, and FTX Ventures. Other investors include Coinbase Ventures, PayPal Ventures, Tiger Global, and Uniswap Labs.
The investors raised a total of $135 million which raised the valuation of LayerZero to unicorn status at $1 billion. LayerZero Labs, the developers of the platform, had previously raised $2 million in a seed round and $6 million in a Series A round.
The protocol is getting the attention of investors due to its approach to solving the security challenges of cross-chain platforms.
Michael Bailhe, a partner at Sequoia, said that LayerZero convinced the firm to believe in a multi-chain future.
We had conviction in a cross-chain future, but the technology to enable it was insufficient—until we met LayerZero, said Bailhe.
LayerZero has a set mission to “connect every smart contract on every chain” as stated by Bryan Pellegrino, CEO and co-founder of the protocol. The protocol promises to not just be like any other bridge protocol, but more of a massaging layer enabling direct cross-chain communication akin to a decentralized SWIFT – the messaging platform used by global financial institutions.
The protocol currently supports seven blockchain networks including Ethereum, Avalanche, Fantom. Development is underway to integrate Terra and Solana in the next four weeks.
Despite LayerZero’s confidence, cross-chain protocols have their work cut out in earning the trust of market participants. In Q1 of 2022, two of the biggest crypto hacks have been thanks to the exploitation of security flaws of cross-bridge protocols.
The Axie Infinity Ronin network hack has been the largest this year, losing investors over $600 million just this week. Wormhole, a Solana and Ethereum bridge protocol with over $1 billion in TVL also lost around $325 million last month.
Vitalik Buterin, co-founder of the Ethereum network, has been among the critics of cross-chain protocols. In a Reddit post he shared earlier this year, Buterin maintained that the security of cross-chain bridges would continue to be an issue as long as the data layer and security layer of the protocol continued to be separate. He maintains that a multi-chain future is more likely in the industry.
The fundamental security limits of bridges are actually a key reason why while I am optimistic about a multi-chain blockchain ecosystem…, I am pessimistic about cross-chain applications, Buterin explained.