LayerZero is the newest hyped-up cryptocurrency that has launched, and in my opinion it is absolutely worthless. There is already vastly superior technology in the market at a much better valuation than LayerZero. So I am going to go through and show you the critical problems I see with LayerZero (ZRO) that prevent me from having any interest, as a crypto investor myself, in buying this. This is my opinion and my own experience, not investing advice.
The price chart and the token dump problem
We will start off with the price chart. This is a new crypto, and often new cryptos tend to have some of the best charts. This one has already managed to go down 20% since it launched. It has a market cap of around $3 billion currently, but there is only $800-and-some million dollars actually on the market. So the more the price goes up, you can be guaranteed there is going to be a ton of token dumpage. While the price certainly could pump off hype and speculation, the fully diluted market cap and the token dumps will go right along with it.
According to CoinMarketCap, 75% of the tokens are not even out there yet. Even in some of the very best cryptocurrencies we have seen, token dumpage always kills off investors over the long term. So just based on that alone, I would have no interest in investing in it. But it gets much, much worse than this.
What LayerZero actually is
Let's talk about what LayerZero is, and I'm going to show you something that is way more effective than LayerZero at what LayerZero does, and why there are critical problems that make this, to me, unusable.
LayerZero says it is an omnichain interoperability protocol designed for messaging across chains. So what does that mean? It helps with things like bridges. It helps Arbitrum talk to Polygon, and so on. Saying it is a "blockchain of blockchains" is crap, and it does not communicate in a totally trustless manner. That is not accurate if you look at how it works. It says LayerZero's key features are that it is a blockchain of blockchains with ultra-light nodes, and then it has smart contracts that run on different blockchains to move among things like Ethereum, BNB, and Avalanche.
Now here is what's interesting. The chain does not have a dedicated roadmap. Hold up. Wait, what? It doesn't have a dedicated roadmap? That's not a good sign. And there are plans to create its own governance token and DAO. Hold up. Why is this not a governance token already? Why is this token, with a $3 billion market cap, not a governance token? That's a little issue I see here.
And a DAO. You know what I can tell you about a DAO? Unless the entire DAO is fully on-chain and controls all the assets, it is not a true DAO. It is a polling mechanism, just as we have seen with Arbitrum, where they made it out to be a DAO token, the DAO voted one way, and the team literally did the opposite of what the DAO voted for. So it's not a governance token. It's a big "F you" to everybody holding the token. The same basic properties are in play here.
Who actually builds this? The transparency red flag
I have had trouble even finding the people who founded this, which is another red flag. You have got LayerZero Labs, but if you try to look for the foundation, it doesn't come up anywhere. And even if you search LayerZero Labs, why isn't there a website? There is a $3 billion valuation. Why isn't there a website like, for example, the Internet Computer's? The DFINITY Foundation, a major contributor, has the largest research and development team in blockchain. They have a website with pictures and short versions of resumes, with hundreds of engineers and technical staff. Why can't LayerZero get something like this? Why does this $3 billion token have a situation where you cannot find hardly anybody who even works on it?
I looked. I tried to find anybody who even works on this for this review. I searched LayerZero Labs. I searched LayerZero team. And I actually found some scammy LayerZero Foundation account that looks like it's ripping people off. It is actually retweeted by the official account, and to me this looks sketchy. This whole thing looks sketchy. If you go to that LayerZero Foundation link, I actually get a 403 error on the URL. That's not a good sign for a $3 billion project, is it?
If you want to follow more of these honest, no-hype breakdowns, I keep them going in my Money playlist, where I review coins exactly the way I'd want them reviewed before I put my own money in.
The critical flaw: off-chain infrastructure
Let's go deeper into another critical problem, and I'll show you why there's something so much better. If you look at LayerZero's "how it works" page, the average person is going to look at it and be like, huh? It explains a source network and a destination network, but here is an absolute critical problem: the source network uses off-chain infrastructure. At least they're transparent about that, which I'll give them. But this is a critical flaw.
This is where things can get hacked. This is where things can get centrally controlled and exploited. This is what we have seen repeatedly in all these other cryptos: when you have got this off-chain infrastructure, this is where the hacks happen and people lose huge amounts of money. When you have an off-chain infrastructure, it is not trustless. There are key points where the verification is off-chain and the execution is off-chain.
Why I think Internet Computer's Chain Fusion is far better
Well, there is somewhere you can actually do this on-chain. Internet Computer Protocol has, in my view, the absolute best interoperability. It is called Chain Fusion. If you search Chain Fusion on Internet Computer Protocol, this has the best technology for interoperability anywhere, because on ICP you can actually have direct interoperability and every single thing can be done on-chain.
LayerZero has launched with inferior technology to what Internet Computer already has. People are building, right now, versions of what LayerZero is doing on Internet Computer, but every single part of it is on-chain, which offers a vastly superior security experience. It eliminates this off-chain infrastructure, which could easily fail, get hacked, or be centrally exploited, and which then cannot be verified to the same level of trust that it can on ICP. ICP already has a Bitcoin layer two as well as an Ethereum layer two. So this Chain Fusion technology is the future of interoperability.
And you can see it in action. It's not speculative, it's not hype. You have got ICP with fully on-chain chat applications, meme coins, ckBTC, ckETH, USDC. You have got all of this directly on-chain. They are rapidly making advancements in Chain Fusion technology, where you can use one wallet, all secured with your biometrics, to sign into all these different applications. Some of the applications, like OpenChat, are fully on-chain, and there are fully on-chain DEXs where you can swap tokens. This is so much more advanced than LayerZero, it's ridiculous.
Anyone who knows about Internet Computer Protocol and then looks at this off-chain infrastructure would immediately pick it out as a critical flaw in the design. Now, this is something most people don't know about. There are already lots of interoperability protocols that have this exact, very similar infrastructure, where they have a source network, off-chain infrastructure bridges the two together, and it sends data among the different ones. But this is where you get hacked and ripped off, where coins are created on one chain and transferred to another.
What utility does the ZRO token even have?
Even if that by itself wasn't such an issue, you look at this and say, well, what utility is this coin going to have? You can see it's blatantly wrong when they say it "allows other blockchain networks to communicate in a trustless manner." The first paragraph is completely inaccurate. And then the utility for the token looks to be extremely limited, because there are plans to create another, separate governance token. What a disaster.
So you're saying this is a utility token, and then there's going to be a separate governance token? That's unlike Internet Computer, where there is one single token that is both the utility token and the governance token, all wrapped up into one massive utility, and the market cap is pretty close to where LayerZero is at today. Meanwhile, LayerZero has just launched. The protocol has been operating for a while, but the token just launched and it has hardly any price history, and it has been operating for years less than Internet Computer.
So you compare these two infrastructures. Right now it says there are 200 applications built on LayerZero. Well, what kind of applications are built? You have got Stargate Finance. This is mostly people just swapping cryptos, swapping a meme coin from one exchange to another, or moving Ethereum from Arbitrum over to Optimism, for example. This is outdated. This stuff is going to be completely irrelevant in the future, because in my opinion Internet Computer is going to consume all of it.
Right now, these Ethereum layer twos are just the newest way to rip people off. They don't offer real promise in scaling Ethereum, because the critical flaw is that everything still has to be built off-chain on the layer two. What you really need to truly scale Ethereum is a single infrastructure where you can put a decentrally held token like ChainKey, and then build the entire rest of the application like OpenChat. That is the most advanced technology we have got today, and this is the future.
The activity is already crashing
A lot of people don't see this yet, and a lot of people are scared to even look at it, because these applications, Aptos Bridge, Stargate Finance, are just trading a whole bunch of people swapping tokens around and moving stuff over. This is quickly going to become irrelevant. You can see how quickly the amount of money flowing through this has dumped to almost zero. When they first started this up, there were a ton of messages. This thing has crashed recently to where there are hardly any messages being sent, by comparison, in April.
Because messaging is the only thing it does. Internet Computer does compute on the blockchain, a Bitcoin layer two, an Ethereum layer two, AI directly on-chain (which nothing else does), Chain Fusion technology, and fully on-chain websites. A whole bunch of stuff. LayerZero is a one-trick pony. This is all it does, and it's already irrelevant in my view, because there are better things than this already operating and being built. You can see how quickly this goes out of style. Anybody else who has something cheaper can just swap to a different infrastructure. To me, this is easily going to zero. This easily looks like a horrible investment.
Why "scammy" is the word that keeps coming to mind
Supporting this, the LayerZero Foundation "claim" page looks so scammy from their official account. To me, the LayerZero Foundation should be the team of people working on this, but you get a 403 error there, and LayerZero Labs just constantly reposts it. This feels yucky to me.
They're also hiring. Their careers page says they're hiring some engineers. But who is already working on this? How many people are actually innovating the protocol? And when you buy the LayerZero token, what do you actually own? I can tell you, you don't own the protocol. If you're holding the token, you do not own the protocol. You don't own the off-chain infrastructure. You have no ability to use your token currently to vote, and even if you do get that ability, it will just be a polling mechanism. You are totally dependent on the team, whoever they are, which they won't even be transparent about.
I have talked to blockchain developers who work in this kind of context. It seems to me that most blockchain developers who work for companies like this don't want their faces public. They are there to collect a paycheck. They dump the tokens the company pays them in as soon as they get them, because many of these developers don't even believe in what they're doing. They're just there to get paid.
That's a sharp contrast to DFINITY, where they have all these people's faces public. You can see these people doing presentations, like Mary just did one on verified credentials, and I've watched videos many of these other presenters have done. They talk about the technology they're making. They are very present. When you look at LayerZero by comparison, you have got a couple hundred applications for a $3 billion valuation, and 70 supported blockchains. You can bet some of those blockchains hardly do anything. $50 billion in value transferred is impressive, but how much of that was done just to artificially inflate the numbers? How much of it could have been done more easily some other way? And how much of it is even going to happen in the future, when people realize you can put your website on ICP, your entire OpenChat-style application, and put all of this stuff together?
When other protocols can claim much higher security for being built fully on-chain, it just makes LayerZero totally irrelevant. That is why I think LayerZero is a car crash. It's a coin that is just going to get run over in time, and there is no way I would buy this. I have been aware of it since the hype started a year ago, and no way would I touch it.
If you want to see how I think about the coins I actually believe in versus the ones I think are headed to zero, I've put a lot of that thinking into my review of why I'm skeptical of another hyped $4B crypto and my Chainlink review. You're also welcome to come talk it through with me directly inside the Jerry Banfield Family, where reviewing coins on request is one of my favorite things to do.
Honestly, asking me to tell you why something sucks and why you shouldn't invest in it has consistently been one of the most-requested things people bring me lately. I'm a full-time creator here to have fun and to help you with the things you ask me to help you with, so I hope I've made my take on LayerZero clear. The safest way to chat with me is through OpenChat, which is hosted directly on ICP, or a one-on-one call. Never trust anything that looks like me anywhere else.