From Omnichain Creator to Witcher LayerZeros ThreeYear Challenging Entrepreneurial Journey

Written by: Babywhale, Techub News
When it comes to the most anticipated airdrops in the first half of this year, LayerZero undoubtedly has a place. As an advocate for the “omnichain” concept and a “hot chicken” that has reached a valuation of several billion dollars in the private financing stage, the news of LayerZero issuing tokens has added fuel to the fire for the upcoming summer in June.
Despite receiving infinite confidence from capital, LayerZero has faced continuous challenges along the way. From the initially considered overvalued valuation, to the questioning of its mechanism’s security, to losing the battle against Wormhole in the official cross-chain protocol launch on BNB Chain on Uniswap, and the lack of support from Lido for wetETH OFT (Omnichain Full Chain Token), the entrepreneurial journey of the past three years has been full of controversy for LayerZero.
The three high-achieving graduates of the computer science department at the University of New Hampshire, Bryan Pellegrino, Ryan Zarick, and Caleb Banister, who were colleagues in the university’s computer network research lab, together formed the core team of LayerZero. Redwood Capital once invited senior journalist and producer Sam Eifling to specifically write about the legendary story of CEO Bryan Pellegrino.
Bryan Pellegrino is a genius poker player who started playing poker at the age of 15 and is also a mathematical genius, winning over $500,000 in total prize money at the World Series of Poker. Bryan Pellegrino was captivated by playing poker online at a young age, which inadvertently sparked his interest in computer science.
In 2013, Bryan Pellegrino inadvertently overheard his brother and brother-in-law discussing Bitcoin. Interestingly, the mining method of Bitcoin had some similarities to the “probability” in poker, which attracted Bryan Pellegrino and his brother and brother-in-law to buy computers for mining. However, due to factors such as the sharp drop in Bitcoin prices, the closure of Bitcoin exchanges, and the arrest of members of the Bitcoin Foundation for money laundering, Bryan Pellegrino temporarily parted ways with cryptocurrencies. His inspirational story of not persisting until the bull market and his return to his favorite poker game is a testament to Bryan Pellegrino’s principle of not standing under a dangerous wall.
Bryan Pellegrino believed that poker is an endless game and that “always winning” no longer brought him joy. Even in 2015, seven years after graduating from college, Bryan Pellegrino was considering retirement. After traveling for a year, Bryan Pellegrino returned to his home in Vancouver and was inexplicably attracted to the concept of “baseball artificial intelligence.” He developed an AI based on analyzing pitchers’ past data to predict their pitching styles against different batters and sold it to several baseball clubs. However, this did not bring Bryan Pellegrino the fulfillment he was looking for, and he wanted to do something more important and hoped to excel in a new field.
The new field at the time was Web3.
Perhaps due to his experience in Bitcoin mining a few years ago, Bryan Pellegrino refocused on Web3 at the end of 2016 and regained his confidence in cryptocurrencies. In 2017, Bryan Pellegrino and Daniel Chen from a16z jointly developed and launched OpenToken, a project that helped ordinary people issue tokens. Despite going through transformation and being acquired, Bryan Pellegrino did not settle in this field and returned to the AI sector.
In 2020, Bryan Pellegrino, together with Ryan Zarick, Caleb Banister, and Noam Brown from Facebook AI, co-authored a paper introducing a poker AI product called “Supremus,” which defeated the world’s best poker AIs and some of the top professional players. Their paper was later cited in game theory research published by DeepMind, a research lab of Alphabet AI.
It was also in the same year that Bryan Pellegrino took notice of Binance Smart Chain (BSC) and planned to develop a game on BSC, with the game’s NFTs being on Ethereum, which made Bryan Pellegrino realize the difficulty and high risk of transferring NFTs between chains at that time. He recognized the need for a fundamental infrastructure that could connect various chains.
After witnessing the isolation of various chains in the Web3 field and the high risk of cross-chain bridges, Bryan Pellegrino planned to develop a protocol to achieve true interconnection between chains, which is what we now see as LayerZero.
From poker to cryptocurrencies, to AI, from a brief return to Web3, then back to AI, and finally establishing LayerZero, Bryan Pellegrino’s journey was not a myth of achieving success with one blow, nor did he have unwavering faith in Crypto for a decade for no reason. Bryan Pellegrino, who graduated from college in 2008, did not find a goal worth dedicating his life to until around 2021, when he was around 35 years old. He may be a genius, but even geniuses have experienced confusion, just like you reading these words.
With a valuation of $30 billion and total funding of over $250 million
In late May 2021, LayerZero’s team released the first version of the whitepaper, titled “LayerZero: Trustless inter-chain transactions,” without mentioning “omnichain.” After confirmation, it was found that although “omnichain” was not originally coined by LayerZero, LayerZero was most likely the first project to give “Web3 a new interpretation” to omnichain. Their blog post titled “LayerZero – An Omnichain Interoperability Protocol,” published on Medium on September 16, 2021, officially set a precedent for omnichain in the Web3 field.
On the same day, LayerZero announced the completion of a $6 million Series A funding round led by MultICOin Capital and Binance Labs, with a valuation of $50 million. From being inspired to establish LayerZero by developing a game on BSC to receiving investment from Binance Labs, LayerZero’s connection with Binance can be considered quite profound.
It is worth mentioning that ZetaChain, another omnichain concept project that announced the completion of a $27 million funding round in August last year, also published its first Medium blog post in December 2021, mentioning the omnichain concept. Perhaps at that time, the Web3 market was still buzzing with excitement over Bitcoin’s record-breaking $69,000 high, and discussions about NFTs and the metaverse were still ongoing, much like the market did not discover the subsequent “red-hot” DeFi in 2018 and 2019.
Don Valentine, the founder of Redwood Capital established in 1972, once stated that it is important for founders to tell stories. As Web3 enters a period of calm in 2022, and no phenomenal concepts have taken over the reins from NFTs and the metaverse, omnichain has been pushed to the forefront.
On March 30, 2022, LayerZero announced the completion of a $135 million Series A+ funding round, with FTX Ventures, Redwood Capital, and a16z leading the investment, and participants including Coinbase Ventures, PayPal Ventures, Tiger Global, and Uniswap Labs, among others, making for an impressive lineup.
On March 18, LayerZero launched its flagship cross-chain product, Stargate, and started selling the STG token. At the time, some investors in the market believed that the token offered by LayerZero was likely STG, and two whale users bought all the tokens available for public sale. Later, LayerZero provided a new investment opportunity for the investors who were authorized to participate but did not receive an allocation. Within a week of Stargate’s launch, the Total Value Locked (TVL) surpassed $20 billion, and two days later, it exceeded $30 billion. A week after the official announcement of the Series A+ funding round, the TVL surpassed $40 billion.
How terrifying are these data? During the previous bull market, star DeFi projects, including Uniswap, Curve, Aave, Compound, and MakerDAO, took at least a month to go from $20 billion to $40 billion in TVL. Lido also took nearly a month. However, Stargate only took 12 days. Although Eigenlayer achieved a faster time of 9 days, its TVL growth was not far from the appreciation of Ethereum itself. After Stargate was launched, most of the liquidity was in stablecoins like USDT and USDC.
This demonstrates that even though the overall market had been in decline for some time, the market was still hot. When comparing the speed of TVL growth from $0 to $20 billion, Stargate might have something to say:
Just under two months after the announcement of the Series A+ funding round, on May 25, 2022, The Block reported that LayerZero Labs had held discussions with various investors for a financing round at a valuation of $30 billion. An insider revealed that the latest financing for LayerZero would be conducted in the form of stocks, LayerZero token warrants, and Stargate native tokens. This confirmed that LayerZero would issue tokens other than STG.
Outside of the financing round, in April, the first LayerZero-based omnichain NFT series, “Gh0stly Gh0sts,” was launched. This NFT could be minted on seven chains supported by LayerZero and its floor price skyrocketed to 1 ETH within 24 hours of its launch. Although this NFT was short-lived, it allowed Bryan Pellegrino to achieve his goal of seamlessly cross-chain NFTs.
In April of the previous year, the dust settled on the Series B financing round, which was disclosed by “sources” a year earlier. The round raised $120 million, and the valuation reached an astonishing $30 billion. The investors included not only regulars in large Web3 projects such as a16z and Redwood, but also unconventional investors who had rarely appeared in the Web3 field, such as Sotheby’s and Franklin Templeton.
As a Web3-native infrastructure project that has reached a valuation of $30 billion in the private financing stage, LayerZero is rare, and its investors come from various fields, almost encompassing all the familiar faces in Web3 projects or institutional financing news. A friend in the industry once shared with me that the financing round for LayerZero was very hot at the time, and financial advisors were aggressively reaching out to some domestic investors. Some investors were swindled into investing, and after regaining composure, they complained to their friends, “Why did I invest at such a high valuation?”
Of course, I did not verify this story, so take it as you will. However, with such stories circulating and considering various factors, it can be said that LayerZero has been in an environment of being highly sought after for quite some time, and it is not surprising if an unexpected turn of events quietly occurs…
The debate over LayerZero’s security and “the highest” bug bounty
The first public relations crisis for LayerZero originated from a report by L2BEAT, which did not point out code-level vulnerabilities, but rather highlighted the unreasonable aspects of LayerZero’s mechanism design. However, as a protocol that had locked a large amount of funds, the risks mentioned by L2BEAT indeed made many people anxious.
In a report released at the beginning of 2023, L2BEAT pointed out that there are two security models in the Web3 field. One is a shared security model, such as Rollup, where all Rollups adopt the same set of security mechanisms. The other is the independent security model commonly used by omnichains, with LayerZero being the representative.
L2BEAT pointed out that the biggest problem with using LayerZero’s cross-chain communication mechanism is that LayerZero cannot restrict users from modifying contracts themselves. This means that users need to assess the security of each protocol themselves.
How should we understand this issue?
Suppose I deploy a token A and use LayerZero’s full-chain token model. This means that I need to deploy my own oracle and relayer for LayerZero, which essentially means that I need to evaluate the security of every protocol.
This report, which highlighted the security risks associated with LayerZero’s design, raised concerns in the market about the safety of the protocol. Despite this, LayerZero has continued to attract attention and investment, showing its resilience and determination to overcome challenges and achieve success in the Web3 space.”SushiSwap Founder 0xMaki Supports LayerZero and Stargate: What’s the Geometric Space of Imagination?”