Today’s and Tomorrow’s Interop - LayerZero, Stargate, OFT

Key Takeaways

• LayerZero with Stargete, provides a comprehensive interop stack that enables cross-chain messaging, asset transfers, and data sharing across 120+ supported chains.

• The OFT (Omnichain Fungible Token) standard choosen by projects like Tether, Ethena, Paypal, allows tokens to move freely between blockchains without wrapping or liquidity pools, creating a unified token supply across networks.

• LayerZero continues to innovate with new capabilities like lzRead for cross-chain data access and QMDB for high-performance verifiable databases.

• As the number of networks grows and fragments, LayerZero’s role as the foundational “Layer 0” connecting these ecosystems becomes increasingly crucial.

What is the goal of interoperability? It's to connect isolated ecosystems. However, there are many meanings to connect two isolated ecosystems, ranging from sending assets and data to execution payloads. When execution payloads are sent, contracts must handle these cross-chain operations.

With approximately 311 L1 blockchains and 56 L2s in mainnet, interoperability strategy needs careful consideration to reach more users and liquidity. The infrastructure of interoperability has evolved based on developer and user needs, making implementation easier for projects. Projects now need to determine whether their goal is to (i) connect in terms of data and logic, (ii) bridge diverse assets, or (iii) tokenize their tokens for cross-chain functionality.

LayerZero and Stargate duo have built a comprehensive stack to fulfill these needs, becoming leaders in this sector in terms of volume and adoption. Let's examine what they offer, their historical metrics, and how interoperability is extending beyond connecting, bridging, and tokenizing.

1. Today’s Interop - Interop from Bottoom to Top

1.1 Connect - Send Messages with LayerZero

Source: Protocol Overview | LayerZero

LayerZero is the underlying infrastructure that powers cross-chain applications like Stargate and enables the issuance of OFT tokens. It allows applications to send messages across different blockchains and provides the foundation for cross-chain interoperability.

LayerZero's design philosophy focuses on offering diverse options for projects while maintaining immutability, censorship resistance, and permissionlessness. The protocol's security stack, combined with configurable contract standards and a wide range of Decentralized Verifier Networks (DVNs), creates a robust foundation for custom security.

Currently, there are 43 DVNs supporting 120+ networks. Popular networks like Ethereum, Arbitrum, and Optimism have multiple options available. Additionally, protocols can run their own DVNs—as demonstrated by Tether and Ondo.

Source: DVN Addresses | LayerZero

1.2 Bridge - Send and Swap the Tokens with Stargate

Stargate is a cross-chain token swap bridge that leverages LayerZero to enable direct swaps between different blockchains, supporting over 67 blockchains and hundreds of tokens. This is crucial for users who need to move assets across ecosystems without multiple transactions.

Along with the cross-chain token swaps, they also provide two offerings:

• Frontend for OFT: It offers a user-friendly interface for managing OFT tokens, including sending and receiving across chains. Note that the DVNs that handle the security of OFT are different from DVNs of Stargate.

• Hydra: A liquidity plugin that allows new blockchains to integrate quickly with Stargate, accessing its liquidity. It allows new chains to have OFT version of major assets like USDT. For instance, Berachain demonstrated this by achieving $3.1 billion in liquidity on Day1. Through this implementation, users could bridge USDC, USDT, and WETH from over 20 chains directly onto Berachain.

Source: Introduction | Stargate

Stargate's growth is highlighted by its TVL reaching $1.5 billion, and handling over $1.8 billion woth of transactions in a recent month. This significant adoption reflects user trust and the platform's ease of use, and wide range of supported chains and tokens. Stargate is also playing a criticial role in rebalancing assets for solvers. Now, Stargate is the most infra for cross-chain liquidity.

Source: Bridge Volume - DefiLlama (data as of 2025.03.09)

1.3 Tokenize - Make Your Token Omnichain With OFT

The Omnichain Fungible Token (OFT) standard allows handling fungible tokens across multiple blockchains. Unlike traditional wrapped tokens, OFT enables seamless transfers without asset wrapping, middlechains, or liquidity pools. This standard works through (i) a lock-and-mint if OFT Adapter is used or (ii) burn-and-mint mechanism.

Source: LayerZero V2 OFT Quickstart | LayerZero

The OFT Adapter functions as an intermediary contract for handling deployed fungible tokens. When transferring an ERC20 from a source chain, the token locks in the OFT Adapter, triggering a new token to be minted on the destination chain. When users want to return to the original chain, the reverse process occurs, burning the minted token and unlocking the original. For USDT0 by Tether, locking is done in USDT in Ethereum, and other works as a burn-and-mint.

For burn-and-mint, tokens are burned on the source chain during a transfer, and a message is sent via the LayerZero protocol to the destination chain, which then mints an equivalent amount of tokens. This creates a unified token supply across networks, preserving the token's integrity and value proposition regardless of which blockchain hosts it.

The implementation is straightforward, as seen in the standard OFT contract structure where developers can deploy an OFT by simply specifying the token name, symbol, LayerZero endpoint address, and local decimals. This simplicity has contributed to the widespread adoption of OFT across various token categories.

OFT is trusted and used by token issuers in diverse categories. From stablecoins like Tether, Ethena, Paypal to assets like wBTC, and even memecoins like PENGU.

Source: LayerZero OFTs

2. Tomorrow’s Interop - More than Assets

2.1 Read - Access Crosschain Data with lzRead

Source: Read External State (LayerZero Read) | LayerZero

LayerZero has evolved beyond simple cross-chain messaging, with the introduction of lzRead. This feature enables developers not only to send cross-chain messages but also to request and retrieve on-chain data from other supported blockchains. lzRead opens up possibilities for how cross-chain data is retrieved, processed, and computed by allowing developers to offload complex computations from on-chain applications. Now, there are 6 DVNs that support lzRead, and they are expected to increase their support.

The lzRead workflow begins when an OApp sends a request through an endpoint, specifying the target chain and the relevant block from which data should be retrieved. A custom Send Library then serializes the request and forwards it to the appropriate chain via configured DVNs. The assigned DVN fetches the requested on-chain data and returns it to the original requester.

Currently, lzRead supports reading calldata, public state variables, and functions that do not modify blockchain state (view and pure functions). Future enhancements may include querying event logs, private state variables, and external data sources, significantly broadening its use cases for on-chain applications.

Practical use cases of lzRead include:

• Cross-Chain Governance (Agora) – Aggregating votes from token holders across different chains

• Asset Verification (ApeChain) – Confirming NFT ownership on Ethereum

• Proof of Reserves (Ambient) – Fetching Total Value Locked (TVL) across multiple chains

• Cross-Chain Price Feeds (Gelato) – Aggregating token prices from various blockchains

• Election Resolution (Wintermute) – Accessing real-time data for prediction markets

3. What’s Next - Combine? Accelerate?

3.1 Combine? - Onchain and Offchain Data with lzRead

LayerZero could potentially extend beyond cross-chain reads to include off-chain data aggregation, creating a comprehensive bridge between traditional finance, Web2 data sources, and blockchain networks. This capability would be particularly valuable for DeFi that needs access to real-world financial data and market information.

Looking into a recent liquidation event on AAVE during the Bybit hack, there was a need to combine multiple data sources. AAVE suffered $22M of liquidation as traders were liquidated based on secondary market pricing despite sound collateralization of USDe. Chainlink's USDe/USD feed deviated from the onchain price, dropping to $0.977—despite redemptions functioning properly. This was a lesson that Risk, price, and proof of reserves data must work together—not in silos—to secure value and keep DeFi systems resilient under stress. Price feeds should reflect real collateral backing, not just secondary market prices.

If the lzRead functionality extends beyond onchain data reads, lzRead DVNs could aggregate various data sources including off-chain data and provide trustworthy data points.

Source: X (@omeragoldberg)

3.2 Accelerate? - Faster and Cheaper with QMDB

In January 2025, LayerZero introduced Quick Merkle Database (QMDB)—a high-performance verification database optimized for blockchain applications. As an open-source solution, QMDB addresses critical performance and scalability challenges in blockchain infrastructure.

The database achieves exceptional throughput, processing 2.28 million state updates and 1 million transactions per second (TPS). Benchmark tests have proven its scalability, handling workloads of 15 billion records (ten times Ethereum's 2024 state) and scaling up to 280 billion records on a single server. The database scales effectively on both consumer and enterprise hardware, making it accessible for various deployment scenarios.

These capabilities make QMDB a powerful tool for blockchain applications that require fast state verification and efficient storage. It shows particular promise for Layer 2 solutions, DEXs, and other applications that need rapid state verification.

Beyond raw performance, QMDB improves blockchain scalability by reducing hardware requirements and capital costs while maintaining security through efficient cryptographic proofs. By lowering barriers to node operation, it helps increase network decentralization. As an open-source LayerZero project, QMDB can strengthen cross-chain communication, enabling new use cases that were previously limited by performance constraints.

Source: QMDB: Quick Merkle Databae | LayerZero Labs

3.3 LayerZero’s Path to Becoming the “Layer 0” of Crypto

LayerZero is solidifying its position as a leading interop protocol, focusing on connecting most of the networks while expanding beyond mere connectivity.

With offerings like lzRead and QMDB, LayerZero is advancing beyond to support more complex cross-chain applications and enhance blockchain performance. As the number of networks grows and fragments, LayerZero’s role as the foundational “Layer 0” connecting these ecosystems becomes increasingly crucial.

The future of blockchain is undeniably multi-chain, and LayerZero is building the infrastructure to make this future seamless from the Day1 of launch.

Source: LayerZero_Whitepaper_V1.1.0.pdf

4. Resource

Related Articles, News, Tweets etc. :

• Protocol Overview | LayerZero

• LayerZero_Whitepaper_V1.1.0.pdf

• QMDB: Quick Merkle Databae | LayerZero Labs