ZetaChain (ZETA) is a Layer 1 blockchain designed to bridge the gap between various blockchain networks. Utilizing the Cosmos SDK and Tendermint consensus mechanism, it enables developers to custom-build scalable interoperable applications. The platform allows decentralized applications (DApps) to leverage the capabilities of multiple blockchains to address current cross-chain protocol issues and achieve full-chain cross-chain functionality. The use of Omnichain smart contracts and the ZetaEVM engine fosters interoperability, making ZetaChain a central integration hub.
Image Source: ZetaChain Official Website
ZetaChain leverages the Cosmos SDK, with the Tendermint consensus engine and Proof of Stake (PoS) model as its foundation, showcasing a unique ability for full-chain interoperability. It uses its own token as Gas fees and has the advantage of extending full-chain EVM smart contracts. As explained by Jed Barker, ZetaChain operates as follows:
Like other architectures, Zeta can provide numerous cross-chain messaging functions, but its unique advantage lies in supporting full-chain EVM contracts, dubbed as the “THORChain with smart contracts” or “Axelar with EVM.” It is built using the Cosmos SDK and CometBFT consensus to create a PoS blockchain, similar to THORChain. Zeta utilizes the ZETA token as a routing token for cross-chain messaging.
Here is the explanation: ZetaCore is the client that generates blocks and runs the Layer1, similar to other PoS blockchains. ZetaClient is responsible for cross-chain operations, with other nodes running both ZetaCore and ZetaClient. Zeta nodes perform three key functions: validation, observation, and signing, each operated by different roles within each node. This architecture enables two key functionalities: Omnichain smart contracts and cross-chain messaging.
Image Source: Delphi Creative
· Validators: Standard CometBFT validators, like on other PoS chains, stake ZETA and vote on blocks;
· Observers: Observers need to run full nodes of external chains, divided into sorters and validators. Sorters oversee events on external chains and send them to validators, who vote on the events to reach a consensus. The role of sorters is solely to ensure validity; any node can sort transactions. This makes running a Zeta node more costly than running a standard chain, similar to THORChain, which is also one reason THORChain has not added Solana support;
· Signers: Nodes share ECDSA/EdDSA keys, with only a supermajority (2/3) able to sign transactions on external chains. Signers are Zeta’s method for custodying assets and signing information on external chains. On smart contract platforms like Ethereum, they can be used to interact with smart contracts and custody assets, as well as custody assets on non-smart contract chains like Bitcoin and Dogecoin. The following image from the whitepaper shows the signing chart.
Image Source: Delphi Creative
CCMP enables the routing of information between other chains through the use of ZetaChain as an intermediary. In the field of other protocols such as LayerZero, Axelar, IBC, Chainlink CCIP, and to some extent, THORChain, competition unfolds in this direction. However, for ZetaChain, their cross-chain messaging protocol is implemented using their native token ZETA, fundamentally differentiating them from their competitors. Except for THORChain, other competitors do not rely on their native tokens for value transfer. An example from the whitepaper — a cross-chain DEX — intuitively demonstrates ZETA’s role in messaging. In this example, if a user wants to exchange 1.2 ETH on Polygon for USDC on Ethereum, the path would be:
Image Source: Delphi Creative
Though logically viable, this solution requires significant capital, somewhat diminishing its competitiveness against intent protocols like Squid and UniswapX, as well as Circle’s CCTP, which occupies a substantial market share as a settlement track. Beyond capital efficiency, cross-chain messaging is a fiercely competitive arena.
Deploying cross-chain smart contracts on Zeta provides numerous benefits for developers, going beyond simply using Zeta and zEVM for transaction facilitation. Firstly, it enables interactions with assets that inherently do not support smart contracts, such as BTC, DOGE, LTC. Secondly, by locating the application state on Zeta, it minimizes the vulnerability attack surface and does not rely on the liquidity of ZETA tokens for the transfer of value. Among its competitors, except for Axelar, which employs CosmWasm instead of EVM, no other protocols currently offer such a product, nor have they seen any adoption thus far.
ZetaChain’s cross-chain smart contracts are backed by the TSS protocol, with validators operating full nodes on external chains and sharing signatures, hence they can custody assets on behalf of ZetaChain and its users. The zEVM is then able to manipulate these assets as desired. It’s important to note that in this process, for example, BTC is not directly transferred from Bitcoin to Zeta, but to addresses custodied by Zeta validators and then represented on ZetaChain, similar to how THORChain adds smart contract capabilities to protocol-custodied BTC.
Image Source: Delphi Creative
Under this framework, Zeta has the capability to develop many unique protocols, for instance:
Fundamentally, the combination of ZetaChain’s zEVM and ZetaClient is distinctive for its custody and control over assets on chains that do not support smart contracts directly. While most cross-chain platforms are used as backend infrastructure, ZetaChain facilitates the creation of its own cryptocurrency economy on ZetaChain.
ZETA serves as the cornerstone of the ZetaChain ecosystem, playing a crucial role in programmability and governance. ZetaChain is distinguished by its interoperability and support for cross-chain dApps, with key network activities dependent on ZETA.
Key Functions of the ZETA Token Include:
Overall, the multifaceted utility of ZETA supports the security, efficiency, and decentralized governance of ZetaChain, making it a vital component of the network’s functionality.
ZETA Token Economy and Issuance The initial total supply of ZETA tokens is set at 2.1 billion, with a planned inflation rate of approximately 2.5% per year after four years. The token distribution (see Reference Link 1) is strategically allocated across various segments of the ecosystem:
Unlike the current state of cross-chain deployments, ZetaChain, as the foundational layer of the protocol, can enable liquidity interoperability among all different deployments. For instance, users on ZetaChain could deposit their margin into a central contract and hold positions on GMX. This forms the core premise of Zeta cross-chain applications (with the position management layer located on Zeta), suggesting that users wanting to utilize the full liquidity of GMX would need to use ZetaChain.
Beyond ensuring execution quality, there are two key advantages:
Smart contracts on ZetaChain can directly deposit the required margin amount to the relevant chain, along with instructions on how to use these assets. Although this process technically does not necessitate ZetaChain, it can enhance the user experience by:
The market leader in the DEX space, UniSwap, might shift its operational hub from Ethereum to any other chain. However, theoretically, by deploying on ZetaChain and using the ZRC-20 standard, users could swap in and out of any asset (across any chain) and custody the said assets on any chain of their choice.
Image Source: LayerZero Official Website
In the cross-chain transfer market, LayerZero stands as ZetaChain’s biggest competitor. Although they do not engage in the competition within the full-chain smart contracts realm, their market position in cross-chain transfers is very solid. Their main advantage comes from Stargate, followed by their promotion of the OFT standard (providing a new solution for cross-chain token transfers, making it simpler and more efficient to transfer tokens between different chains).
LayerZero Architecture
To briefly introduce, LayerZero is a protocol that allows “user applications” to send information across blockchains. The architecture consists of 4 main parts:
This design essentially boils down to a 2/2 multisig, where the primary trust assumption is that Google Cloud and LayerZero will not collude. Relying on these off-chain components (like oracles and relayers) benefits from a lightweight, cheap, and scalable architecture but has the downside of depending on two centralized entities, potentially exposing it to censorship risks.
Image Source: Axelar Official Website
Compared to LayerZero, Axelar’s structure is more similar to Zeta but with notable differences. Like ZetaChain, Axelar is also developed using the Cosmos SDK. However, it does not directly host EVM, thus not supporting the same type of full-chain smart contracts as Zeta. Therefore, Axelar’s target market is cross-chain messaging, similar to LayerZero.
Axelar Architecture
Axelar is a PoS chain with its validator set and staking token AXL, consisting of and processing information as follows:
Overall, besides supporting EVM on its chain,its structure is similar to ZetaChain, except for supporting EVM on its own chain. In terms of security, Delphi Research considers it safer than LayerZero’s 2/2 model, although it still has some shortcomings. The likelihood of collusion between Google and LayerZero is significantly low since applications can run their own relayers.
Image Source: Chainlink Official
The Cross-Chain Interoperability Protocol (CCIP) does not differ significantly from other cross-chain information platforms, where a user sends information on one chain, it gets forwarded to CCIP, and then CCIP forwards the information to the destination chain. What sets CCIP apart is how it utilizes Oracle Networks, and the addition of another entity: the Risk Management Network.
CCIP is divided into on-chain and off-chain components.
On-Chain Components:
Off-Chain Components:
In reality, to break the isolation effect between chains, addressing the issues of “multi-chain communication” and “cross-chain communication” is of paramount importance. Compared to other solutions, the core advantage of the ZetaChain project lies in its cross-chain interoperability capabilities, making interoperability between different blockchains possible and addressing the current issues of blockchain fragmentation and lack of interoperability. It aims to enable full-chain dApps to directly interact natively with different blockchains without the need to wrap or bridge any assets. However, there are security risks associated with external chains connected to ZetaChain, which may lead to double spending, censorship, reorgs, hard forks, chain splits, etc.
Currently, LayerZero and Axelar are leading in the application of cross-chain information. However, it is still too early to declare a definitive leader. While looking forward to the new solutions from ZetaChain, there is also anticipation for continuous iteration and innovation from LayerZero, Axelar, Chainlink CCIP, and others.
YBB is a web3 fund dedicating itself to identify Web3-defining projects with a vision to create a better online habitat for all internet residents. Founded by a group of blockchain believers who have been actively participated in this industry since 2013, YBB is always willing to help early-stage projects to evolve from 0 to 1.We value innovation, self-driven passion, and user-oriented products while recognizing the potential of cryptos and blockchain applications.
Reference Articles:
Additional Links:
This article is reprinted from [medium], Forward the Original Title‘ZetaChain: A New Competitive Landscape for Multi-Chain and Cross-Chain Communication YBB YBB Capital’, All copyrights belong to the original author [YBB]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.
ZetaChain (ZETA) is a Layer 1 blockchain designed to bridge the gap between various blockchain networks. Utilizing the Cosmos SDK and Tendermint consensus mechanism, it enables developers to custom-build scalable interoperable applications. The platform allows decentralized applications (DApps) to leverage the capabilities of multiple blockchains to address current cross-chain protocol issues and achieve full-chain cross-chain functionality. The use of Omnichain smart contracts and the ZetaEVM engine fosters interoperability, making ZetaChain a central integration hub.
Image Source: ZetaChain Official Website
ZetaChain leverages the Cosmos SDK, with the Tendermint consensus engine and Proof of Stake (PoS) model as its foundation, showcasing a unique ability for full-chain interoperability. It uses its own token as Gas fees and has the advantage of extending full-chain EVM smart contracts. As explained by Jed Barker, ZetaChain operates as follows:
Like other architectures, Zeta can provide numerous cross-chain messaging functions, but its unique advantage lies in supporting full-chain EVM contracts, dubbed as the “THORChain with smart contracts” or “Axelar with EVM.” It is built using the Cosmos SDK and CometBFT consensus to create a PoS blockchain, similar to THORChain. Zeta utilizes the ZETA token as a routing token for cross-chain messaging.
Here is the explanation: ZetaCore is the client that generates blocks and runs the Layer1, similar to other PoS blockchains. ZetaClient is responsible for cross-chain operations, with other nodes running both ZetaCore and ZetaClient. Zeta nodes perform three key functions: validation, observation, and signing, each operated by different roles within each node. This architecture enables two key functionalities: Omnichain smart contracts and cross-chain messaging.
Image Source: Delphi Creative
· Validators: Standard CometBFT validators, like on other PoS chains, stake ZETA and vote on blocks;
· Observers: Observers need to run full nodes of external chains, divided into sorters and validators. Sorters oversee events on external chains and send them to validators, who vote on the events to reach a consensus. The role of sorters is solely to ensure validity; any node can sort transactions. This makes running a Zeta node more costly than running a standard chain, similar to THORChain, which is also one reason THORChain has not added Solana support;
· Signers: Nodes share ECDSA/EdDSA keys, with only a supermajority (2/3) able to sign transactions on external chains. Signers are Zeta’s method for custodying assets and signing information on external chains. On smart contract platforms like Ethereum, they can be used to interact with smart contracts and custody assets, as well as custody assets on non-smart contract chains like Bitcoin and Dogecoin. The following image from the whitepaper shows the signing chart.
Image Source: Delphi Creative
CCMP enables the routing of information between other chains through the use of ZetaChain as an intermediary. In the field of other protocols such as LayerZero, Axelar, IBC, Chainlink CCIP, and to some extent, THORChain, competition unfolds in this direction. However, for ZetaChain, their cross-chain messaging protocol is implemented using their native token ZETA, fundamentally differentiating them from their competitors. Except for THORChain, other competitors do not rely on their native tokens for value transfer. An example from the whitepaper — a cross-chain DEX — intuitively demonstrates ZETA’s role in messaging. In this example, if a user wants to exchange 1.2 ETH on Polygon for USDC on Ethereum, the path would be:
Image Source: Delphi Creative
Though logically viable, this solution requires significant capital, somewhat diminishing its competitiveness against intent protocols like Squid and UniswapX, as well as Circle’s CCTP, which occupies a substantial market share as a settlement track. Beyond capital efficiency, cross-chain messaging is a fiercely competitive arena.
Deploying cross-chain smart contracts on Zeta provides numerous benefits for developers, going beyond simply using Zeta and zEVM for transaction facilitation. Firstly, it enables interactions with assets that inherently do not support smart contracts, such as BTC, DOGE, LTC. Secondly, by locating the application state on Zeta, it minimizes the vulnerability attack surface and does not rely on the liquidity of ZETA tokens for the transfer of value. Among its competitors, except for Axelar, which employs CosmWasm instead of EVM, no other protocols currently offer such a product, nor have they seen any adoption thus far.
ZetaChain’s cross-chain smart contracts are backed by the TSS protocol, with validators operating full nodes on external chains and sharing signatures, hence they can custody assets on behalf of ZetaChain and its users. The zEVM is then able to manipulate these assets as desired. It’s important to note that in this process, for example, BTC is not directly transferred from Bitcoin to Zeta, but to addresses custodied by Zeta validators and then represented on ZetaChain, similar to how THORChain adds smart contract capabilities to protocol-custodied BTC.
Image Source: Delphi Creative
Under this framework, Zeta has the capability to develop many unique protocols, for instance:
Fundamentally, the combination of ZetaChain’s zEVM and ZetaClient is distinctive for its custody and control over assets on chains that do not support smart contracts directly. While most cross-chain platforms are used as backend infrastructure, ZetaChain facilitates the creation of its own cryptocurrency economy on ZetaChain.
ZETA serves as the cornerstone of the ZetaChain ecosystem, playing a crucial role in programmability and governance. ZetaChain is distinguished by its interoperability and support for cross-chain dApps, with key network activities dependent on ZETA.
Key Functions of the ZETA Token Include:
Overall, the multifaceted utility of ZETA supports the security, efficiency, and decentralized governance of ZetaChain, making it a vital component of the network’s functionality.
ZETA Token Economy and Issuance The initial total supply of ZETA tokens is set at 2.1 billion, with a planned inflation rate of approximately 2.5% per year after four years. The token distribution (see Reference Link 1) is strategically allocated across various segments of the ecosystem:
Unlike the current state of cross-chain deployments, ZetaChain, as the foundational layer of the protocol, can enable liquidity interoperability among all different deployments. For instance, users on ZetaChain could deposit their margin into a central contract and hold positions on GMX. This forms the core premise of Zeta cross-chain applications (with the position management layer located on Zeta), suggesting that users wanting to utilize the full liquidity of GMX would need to use ZetaChain.
Beyond ensuring execution quality, there are two key advantages:
Smart contracts on ZetaChain can directly deposit the required margin amount to the relevant chain, along with instructions on how to use these assets. Although this process technically does not necessitate ZetaChain, it can enhance the user experience by:
The market leader in the DEX space, UniSwap, might shift its operational hub from Ethereum to any other chain. However, theoretically, by deploying on ZetaChain and using the ZRC-20 standard, users could swap in and out of any asset (across any chain) and custody the said assets on any chain of their choice.
Image Source: LayerZero Official Website
In the cross-chain transfer market, LayerZero stands as ZetaChain’s biggest competitor. Although they do not engage in the competition within the full-chain smart contracts realm, their market position in cross-chain transfers is very solid. Their main advantage comes from Stargate, followed by their promotion of the OFT standard (providing a new solution for cross-chain token transfers, making it simpler and more efficient to transfer tokens between different chains).
LayerZero Architecture
To briefly introduce, LayerZero is a protocol that allows “user applications” to send information across blockchains. The architecture consists of 4 main parts:
This design essentially boils down to a 2/2 multisig, where the primary trust assumption is that Google Cloud and LayerZero will not collude. Relying on these off-chain components (like oracles and relayers) benefits from a lightweight, cheap, and scalable architecture but has the downside of depending on two centralized entities, potentially exposing it to censorship risks.
Image Source: Axelar Official Website
Compared to LayerZero, Axelar’s structure is more similar to Zeta but with notable differences. Like ZetaChain, Axelar is also developed using the Cosmos SDK. However, it does not directly host EVM, thus not supporting the same type of full-chain smart contracts as Zeta. Therefore, Axelar’s target market is cross-chain messaging, similar to LayerZero.
Axelar Architecture
Axelar is a PoS chain with its validator set and staking token AXL, consisting of and processing information as follows:
Overall, besides supporting EVM on its chain,its structure is similar to ZetaChain, except for supporting EVM on its own chain. In terms of security, Delphi Research considers it safer than LayerZero’s 2/2 model, although it still has some shortcomings. The likelihood of collusion between Google and LayerZero is significantly low since applications can run their own relayers.
Image Source: Chainlink Official
The Cross-Chain Interoperability Protocol (CCIP) does not differ significantly from other cross-chain information platforms, where a user sends information on one chain, it gets forwarded to CCIP, and then CCIP forwards the information to the destination chain. What sets CCIP apart is how it utilizes Oracle Networks, and the addition of another entity: the Risk Management Network.
CCIP is divided into on-chain and off-chain components.
On-Chain Components:
Off-Chain Components:
In reality, to break the isolation effect between chains, addressing the issues of “multi-chain communication” and “cross-chain communication” is of paramount importance. Compared to other solutions, the core advantage of the ZetaChain project lies in its cross-chain interoperability capabilities, making interoperability between different blockchains possible and addressing the current issues of blockchain fragmentation and lack of interoperability. It aims to enable full-chain dApps to directly interact natively with different blockchains without the need to wrap or bridge any assets. However, there are security risks associated with external chains connected to ZetaChain, which may lead to double spending, censorship, reorgs, hard forks, chain splits, etc.
Currently, LayerZero and Axelar are leading in the application of cross-chain information. However, it is still too early to declare a definitive leader. While looking forward to the new solutions from ZetaChain, there is also anticipation for continuous iteration and innovation from LayerZero, Axelar, Chainlink CCIP, and others.
YBB is a web3 fund dedicating itself to identify Web3-defining projects with a vision to create a better online habitat for all internet residents. Founded by a group of blockchain believers who have been actively participated in this industry since 2013, YBB is always willing to help early-stage projects to evolve from 0 to 1.We value innovation, self-driven passion, and user-oriented products while recognizing the potential of cryptos and blockchain applications.
Reference Articles:
Additional Links:
This article is reprinted from [medium], Forward the Original Title‘ZetaChain: A New Competitive Landscape for Multi-Chain and Cross-Chain Communication YBB YBB Capital’, All copyrights belong to the original author [YBB]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.