Introduction
In late December, Ava Labs released a new primitive to the Avalanche platform called Avalanche Warp Messaging (AWM). AWM solidifies Avalanche as a Layer 0 (L0) blockchain platform. This article seeks to assess its standing within the broader realm of L0 solutions. First, we’ll contextualize AWM by delineating the underlying purpose and overarching narrative of Layer 0 (L0) solutions, as well as establishing a framework for evaluating L0 blockchains. We’ll then evaluate popular L0 blockchains with that framework and present a potential future outlook on interconnected L0s.
Layer 0 Primer
L0 blockchain platforms establish a network of interoperable blockchains through a standardized communication protocol. In other words, L0s are the mechanisms by which independent blockchains send messages and initiate transactions on other blockchains. Through L0s, users can transfer assets or messages from one blockchain to another and establish channels for liquidity flow.
The primary service that L0s provide is reducing or eliminating the risk of insecure bridges with potentially highly valuable vaults. A bridge is an application that facilitates transactions between blockchains. To transfer assets without an L0, bridges often store source blockchain assets in a bridge smart contract (vault) to mint a synthetic representation of those assets on the destination chain. Over time, these kinds of bridges collect value and become increasingly appealing attack vectors. Crucially, these bridges assume the economic security of the weakest link among the source blockchain, the bridge, and the destination blockchain. Unfortunately for decentralized finance (DeFi) users, the bridge is the often weakest link. According to a report from Chainalysis, cross-chain bridge protocols accounted for $1.98b worth of stolen funds in 2022.
L0s play an important role in the app-chain thesis – the thesis that the most efficient method of scaling blockchain networks is through the deployment of autonomous Layer 1, application-specific blockchains (app-chains). Some L0 platforms provide benefits to app-chains by allowing virtual machine customization, offering cheaper fees, and isolating network activity from other projects in the ecosystem.
In the app-chain thesis, time-to-finality plays an important role in the user experience, especially in the creation of composable services (services that can be sequentially strung together to form a composite service). This is because a transaction must finalize on the source blockchain before subsequent blockchains can be called. Consequently, finalization times compound over blockchain jumps. For instance, if a composite service is composed of three calls on different blockchains, the end user must wait for the finalization time of three blockchains. In this example, a user will wait 3 seconds with an L0 with a time-to-finality of 1 second and 15 seconds with an L0 with a time-to-finality of 5 seconds.
Framework for L0 Evaluation
The ideal L0 facilitates fast transactions between blockchains and avoids imposing security assumptions. Although other factors like security models are relevant, they represent design tradeoffs rather than a fundamental framework.
Transaction finality significantly impacts the user experience. As shown by web2 studies, there is a clear correlation between prolonged wait times for transaction finalization and a decline in user satisfaction, leading to an increased likelihood of abandonment.
If an L0 bridge minimizes security assumptions, the economic security of a cross-chain transaction becomes the weaker economic security of either of the two blockchains, removing the often weakest link (insecure bridges) from the chain of trust.
Evaluating and Comparing L0s
Avalanche
AWM is a messaging primitive implemented at the networking layer that allows any subnet to send and verify messages from other subnets or application-specific blockchains on Avalanche. Avalanche consensus allows transactions to finalize in less than 1 second. Furthermore, because Avalanche maintains a registry of staking validators on its platform blockchain, also known as the P-Chain, AWM uses an efficient cryptographic signature scheme called Boneh-Lynn-Shacham (BLS) signatures to verify messages. BLS signatures aggregate multiple validator signatures into a single aggregated signature, drastically reducing the time of message validation when compared to platforms that accumulate validator signatures.
In the future, AWM will also be able to provide messaging delivery guarantees. Because AWM is always between Subnets in the Avalanche ecosystem, AWM imposes no additional trust assumptions beyond the security of the Subnets and the P-Chain.
Although AWM serves its purpose for messaging, it lacks a bridge to enable asset transfer. Therefore, at present, AWM is not a viable option for facilitating the transfer of assets.
LayerZero
LayerZero is a generalizable messaging layer implemented at the application layer. Unlike the other L0 platforms mentioned in this article, LayerZero passes messages through smart contracts of any two arbitrary blockchains.
Stargate Finance is a bridge built on top of LayerZero that offers natively supported token swaps. Typically, Stargate Finance caters to stablecoins and ETH.
Stargate Finance offers guaranteed instant finality for cross-chain transactions after they are included in a block on the destination chain. This means that bridging using Stargate Finance assumes the time-to-finality of the destination blockchain. For example, bridging from Arbitrum to Ethereum through Stargate Finance would assume the finalization speed of Ethereum, ~6 minutes.
LayerZero imposes some trust assumptions, namely that the oracle (a forwarder of block headers) and the relayer (a transaction proof submitter) that sit between the two blockchains do not collude, adding some third-party risk.
As an aside, it is possible to replace the oracle and relayer within the Avalanche ecosystem to remove this trust assumption.
Cosmos
Cosmos is one of the main players in the L0 space. Communication between all Cosmos blockchains occurs through the inter-blockchain communication protocol (IBC). Cosmos’s unique strength is its ability to connect two sovereign blockchains. Blockchains that implement IBC can communicate with any other blockchain that does the same. Since all Cosmos blockchains are tendermint-based, transactions are typically finalized within 3-6 seconds.
Security of the Cosmos ecosystem can be reduced to the security of the light clients. A light client tracks the consensus state of another blockchain along with the proof specification necessary to properly verify proofs against the client’s consensus state. Through light clients, Cosmos minimizes imposing additional security assumptions.
Polkadot
Polkadot is the largest L0 by market cap. It facilitates message exchange between Polkadot blockchains through several message protocols, including Cross-Chain Message Passing (XCMP), Vertical Message Passing (VMP), and Horizontal Relay-Routed Message Passing (HRMP). These messaging protocols utilize a standardized message format called Cross-Chain Messaging (XCM). Additionally, Polkadot offers a variety of bridging methods, which can be implemented at different levels of the tech stack with various trust assumptions. In the best case, XCMP allows parachains to share messages without additional trust assumptions.
Polkadot uses a hybrid consensus model where block production (BABE consensus) ensures probabilistic finality and eventual consensus ensures provable finality (GRANDPA consensus). Provable finality varies with the number of checks that need to be performed, but the expected time-to-finality is around 12-60 seconds.
A Unified Future
While L0s connect blockchains together, there is no trust-minimized way to connect L0s together yet. A combined L0 landscape has the potential to enhance the composable services and aggregate liquidity across the Avalanche, Cosmos, and Polkadot ecosystems. A unified landscape would maintain each platform’s relative advantages and disadvantages and potentially amplify the downstream effects of innovation of a particular chain.
Because Cosmos’s IBC connects sovereign blockchains in a trust-minimized way, Cosmos can theoretically serve as the trust-minimized connector between L0s. Landslide Network is a project implementing IBC on an Avalanche Subnet. Additionally, there are several Polkadot projects working in partnership with the Interchain Foundation to build an IBC-compatible light client to connect Polkadot and Cosmos.
Assuming successful IBC integrations on Avalanche or Polkadot, innovations on Cosmos could impact the Avalanche or Polkadot ecosystems. For instance, Cosmos has plans for a mesh security model where Cosmos Zones and Cosmos Hubs bidirectionally secure each other. This could mean that Cosmos validators may be able to secure Avalanche Subnets or Polkadot parachains in the future.
In a unified L0 vision, LayerZero and Stargate Finance could provide a unified frontend user experience. Because LayerZero projects can be blockchain agnostic, products built on LayerZero can create an abstraction layer for DeFi protocols where security, liquidity, and performance are primary backend differentiators.
Currently, Polkadot’s main advantage over Cosmos or Avalanche is that it shares security across all of its parachains, granting parachains the full economic security of the Polkadot ecosystem. However, Polkadot’s limitations lie in its limited parachain auction slots and slow consensus finalization time, which restricts the selection of secure projects and results in slow composable services.
Avalanche’s key strength is that it has the fastest time-to-finality, which will become increasingly relevant as DeFi applications abstract away backend architectures and as the Avalanche ecosystem continues to mature. Avalanche’s disadvantages are its limited trust-minimized interoperability with other L0s and low initial economic security of permissionless subnets.
Conclusion
In conclusion, AWM has the potential to fuel the fastest underlying infrastructure for inter-blockchain composable services. While Avalanche’s vision for inter-subnet asset transfer remains incomplete, AWM represents a significant step forward in composable services between Subnets. As infrastructure among all L0s continues to develop, Avalanche could be well-positioned as the fastest computation layer for composable services in a liquidity-unified L0 landscape.
