The Bitcoin price crash, panic selling across the cryptocurrency ecosystem, and miners unplugging rigs due to record losses amid rising power costs have not diminished the potential of blockchain technology across diverse industries, particularly in banking.
The crypto industry continues to explore ways to scale blockchain to handle the volumes generated by traditional financial entities such as the New York Stock Exchange (NYSE). At the same time, brokerages and major banks remain concerned that using blockchains like Ethereum or Solana could expose sensitive client data on public ledgers.
However, Sequoia-backed crypto company LayerZero recently announced plans to launch the Zero blockchain as part of efforts to create TradFi-grade trading infrastructure that addresses Wall Street’s concerns. Ken Griffin’s Citadel Securities, NYSE parent Intercontinental Exchange, and ARK Invest’s Cathie Wood are joining as investors and advisors.
What is the Zero Blockchain?
The Zero blockchain is designed to address scalability roadblocks by using zero-knowledge proofs that allow different parties to verify information in a privacy-preserving method. ‘[LayerZero] has such an expansive understanding of what’s going on in the markets. Really bringing internet speed to finance — that’s a big idea,’ LayerZero cofounder Bryan Pellegrino told a media outlet.
The Vancouver-based company initially wanted to develop technology to connect blockchains for decentralised applications to exchange tokens and data between different networks. The company pivoted to creating the Zero blockchain by leveraging the technology of zero-knowledge proofs at a fraction of a cent per transaction, compared with Solana’s previous maximum of 100,000. The blockchain is expected to launch in September.
The decentralised nature of blockchain networks makes it challenging to manage a high throughput of transactions while keeping overheads low. ‘One of the key hurdles has been speed and transactions per second,’ Wood said. ‘This [Zero blockchain] is in a completely different league.’
Citadel Leading the Crypto Initiative on Wall Street
Citadel invested in LayerZero through a token purchase, though the deal size was not immediately disclosed. ARK Invest and stablecoin giant Tether also announced plans to invest in the new blockchain.
Griffin’s company has faced resistance in the crypto industry after urging the US Securities and Exchange Commission to regulate decentralised finance in a similar manner to its traditional counterpart. However, LayerZero’s focus is not on how the sector views Citadel, but on engaging with global institutions with the most market structure experience.
‘When you think about the next few years, how do markets move from 7/5 to 24/7 — what does it look like when markets are entirely global? How do you actually build those markets for the future?’ Pellegrino asked.
These early investments and the potential of the new Zero blockchain do not guarantee the company’s future success or adoption of the technology by Wall Street. It also remains unclear how the NYSE will integrate decentralisation into its infrastructure.
‘It’s not what exists today,’ said LayerZero cofounder Raz Zarick. ‘But something that actually uses two million transactions per second is the future world economy.’
LayerZero raised $120 million in funding in 2023 from Andreessen Horowitz and Sequoia, valuing the startup at $3 billion at the time.