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Omnichain NFTs

What they are, and why they matter!
William M. Peaster William M. Peaster Apr 5, 20224 min read
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Omnichain NFTs

Dear Bankless Nation,

Everyone’s talking about omnichain NFTs lately.

What are omnichain NFTs, though?

If you’re in the dark here, no worries — the concept’s just begun to surge into the cryptoeconomy’s discourse over the past few weeks.

Accordingly, let’s play catch up and see what all the buzz is about for today’s Metaversal.

-WMP


Understanding omnichain NFTs

The context

The recent boom of omnichain chatter largely stems from the rise of LayerZero Labs, a Canada-based team that has created the interoperability protocol LayerZero.

If you want to dive deep, you can check out the protocol’s whitepaper. But simply put, LayerZero is a messaging transport layer designed to allow smart contracts to easily communicate among many, or rather any, blockchains.

The protocol initially launched with support for projects that are compatible with the Ethereum Virtual Machine (EVM), namely Ethereum, Arbitrum, Avalanche, BSC, Fantom, Optimism, and Polygon. Going forward, the LayerZero team also plans to add support for non-EVM chains like Cosmos Hub, Terra, and beyond.

Comparing omnichain, crosschain, & multichain

The LayerZero protocol functions similarly to the Cosmos ecosystem’s “layer zero” Inter-Blockchain Communication (IBC) protocol, at least in a general sense. Where LayerZero stands out is in its use of Ultra Light Nodes (ULNs), which present a new model for securely transferring messages among chains in a cost-effective manner.

Accordingly, LayerZero’s omnichain messaging model is distinct from the crosschain model, which entails using a bridge to directly migrate or wrap assets onto other chains. For example, if I bridge ETH over the Ronin bridge to use the Katana decentralized exchange, that’s a crosschain application, and my ETH directly moves from Ethereum to Ronin.

The omnichain model is also contrastable with the multichain model, i.e. separate communities with distinct values pursuing their own tech stacks. Consider how the Ethereum community, per its values and infra, is pursuing self-sufficiency via trustless transfers among Ethereum and layer-two (L2) scaling solutions, while other alternative L1 ecosystems like Solana’s are taking their own distinct approaches to scaling.

The rise of omnichain NFTs

In recent months, we’ve seen a surge of interest around NFT applications across multiple blockchains. For example, below see dom, the creator of Loot and beyond, wondering out loud about how to readily track NFTs actions across chains (which gave rise to my previous “Bridging the L1-L2 divide” post).

This sort of cross-chain tracking has been an open problem before, though a growing number of people are excited about the arrival of LayerZero precisely because of its potential to make NFTs and related projects go omnichain and exist in much wider ways.

Zooming in, you can trace the current boom of attention around omnichain NFTs to the recent launch of Stargate Finance, a bridging protocol and the first application to go live atop LayerZero. With this inaugural application activated, people and builders have started looking out on other promising use cases, of which NFTs are certainly a big area of interest.

At the same time, the notion of omnichain NFTs isn’t new or limited to LayerZero. For example, the UMA project’s Optimistic Oracle already has some omnichain-like functionalities. Moreover, I suspect over time that we’ll see many additional distinct approaches to omnichain activity come to the fore as new advancements are made and further innovated upon.

The Gh0stly Gh0sts example

Stealth launched yesterday, Gh0stly Gh0sts is the first LayerZero-powered NFT collection, and it’s already gained non-trivial traction.

Image via gem.xyz

The ghost-themed, free-to-mint, CC0 project has unsurprisingly seen the most trading activity on Ethereum so far, though notably all 7 of the aforementioned LayerZero-compatible chains have already seen Gh0stly Gh0sts transactions. Thus the omnichain NFT era is now officially in swing, so to speak.

The big picture

I think omnichain NFTs can grow the pie for many projects and many chains at once. This sort of technology may indeed prove to be a pivotal catalyst in bringing non-trivial NFT activity to other chains.

Yet I also think there may be a “king of the hill” buff effect in play, where over time omnichain NFTs might ultimately prove to be the most beneficial for Ethereum, i.e. they can play a huge role in solidifying and extending Ethereum’s already extensive influence that much further while also advancing the influence of other chains in parallel.


Action steps

William M. Peaster

Written by William M. Peaster

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William M. Peaster, Senior Writer, has been with Bankless since January 2021. Immersed in Ethereum since 2017, he writes the Metaversal newsletter on the onchain frontier, covering everything from AI projects to crypto games, as the team’s lead NFT analyst. With a background in creative writing, he writes fiction and publishes art on Ethereum in his free time. He lives in Washington.

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