Bridging & Messaging Partner for GMX

[LayerZeroLabs]

GMX x LayerZero Partnership Proposal

1 | Company Overview

Founded in 2021, LayerZero is the leading interoperability solution, securing over $100 billion in assets across a vast network of blockchain ecosystems. LayerZero is leveraged by a diverse range of industry leaders, from DeFi protocols expanding their total value locked (TVL) across multiple chains to institutions utilizing its technology for tokenization and seamless cross-chain interoperability. As the most widely connected interoperability protocol, LayerZero enables value transfer across more than 120 chains, including Solana, TON, Aptos, and all major EVM-compatible networks.

LayerZero is trusted by leading institutions and DeFi protocols to facilitate secure and scalable cross-chain liquidity movement and messaging. Notable implementations include:

• USTD0: LayerZero powers USDT0’s cross-chain interoperability using the OFT standard, enabling seamless transfers across ecosystems. This also connects to legacy USDT via the Legacy Mesh, bridging liquidity between Ethereum, Tron, TON, and Arbitrum. Using Arbitrum as a hub, USDT holders can seamlessly access the USDT0 network and emerging ecosystems like Ink and Berachain, reducing fragmentation and enhancing capital efficiency.
• PayPal: PayPal integrated LayerZero’s OFT standard to facilitate cross-chain functionality for PYUSD, ensuring secure and standardized transfers between Ethereum and Solana. To meet NYDFS compliance requirements, LayerZero extended its Decentralized Verifier Network (DVN) model to incorporate custom blacklist functionality, rate limiting, and other security controls, allowing PayPal to maintain full regulatory oversight of its asset.
• BitGo: BitGo implemented LayerZero’s OFT Standard to upgrade wBTC – addressing wBTC’s primary challenge: fragmented liquidity caused by different versions of wBTC existing across multiple chains. Within six months, wBTC has expanded to Base, Avalanche, BNB, Berachain, Unichain, Sei and many more. The OFT implementation unified liquidity across all supported networks, eliminating the need for wrapped assets, enhancing security and scalability for wBTC holders.
• Ondo: As the issuer of USDY, one of the largest RWA-backed stablecoins, Ondo selected LayerZero to enable cross-chain transfers across Ethereum, Arbitrum, and Mantle, with further chain expansions planned for 2025. Security and operational control were critical factors in Ondo’s decision, as LayerZero’s OFT framework provides rate limiting, pausing mechanisms, and a dedicated DVN structure to verify all USDY transactions.
• Ethena: Ethena adopted LayerZero’s OFT standard to expand USDe, sUSDe, and ENA across 10 ecosystems, achieving over $2 billion in cross-chain transaction volume. USDe’s rapid growth highlights LayerZero’s ability to facilitate scalable, compliant, and efficient cross-chain movement, with built-in security features such as blacklisting and controlled access mechanisms ensuring seamless asset management.
• Boyco: Royco, Berachain and LayerZero recently coordinated to run a predeposit OFT vault campaign for Bera, collaborating to create Boyco Markets. These vaults attracted over $2.2B in pre-deposit funds from partners such as Ethena, Etherfi and Solv. Berachain combined these vaults with an OFT-powered bridge; in total, the two were responsible for over $3.2B in day-one OFT deposits, all of which went through 100% seamlessly.
• And hundreds more: Usual Money, Resolv, Swell, MIM, Anzen Finance, Maple Finance, Avalon Finance, Schuman Financial, Kelp DAO rsETH, Mantle cmETH, Frax Finance, PancakeSwap, Radiant, CORE, Pendle, Angle Protocol, Clearpool, StakeStone, BTC.b, Superform, ApeCoin, Dinero, etc.

2 | Technical Outline

LayerZero is a network of smart contracts, not a blockchain, designed to provide immutable, censorship-resistant, and permissionless interoperability across chains. The protocol is highly secure, extensively audited, and battle-tested, with the second-largest bug bounty in the space. Unlike traditional cross-chain solutions, LayerZero’s core protocol is immutable, meaning that once deployed, it cannot be altered or upgraded, eliminating the primary attack vector for the majority of cross-chain exploits.

For GMX, this means operating on an interoperability layer that is entirely controlled by GMX, with a bespoke configuration for verification and execution, similar to how PayPal and Ondo Finance have structured their deployments. GMX retains full autonomy over how cross-chain transactions are validated and executed, ensuring security, reliability, and control over its assets and messaging.

Security & Mitigating Chain Reorgs

Given LayerZero’s architecture, GMX has full configurability over its cross-chain interactions and can leverage multiple features to mitigate against block reorgs and other concerns. The protocol is highly configurable, allowing GMX to:

• Define source chain finality by setting the exact number of block confirmations required before a message is accepted on the destination chain.
• Choose the verification model, selecting a specific set of Decentralized Verifier Networks (DVNs) to approve messages.
• Implement rate limits to prevent unusual transaction activity from impacting liquidity or order execution.
• Customize execution logic to define how transactions behave under different conditions, ensuring deterministic and predictable cross-chain operations.

Additionally, GMX can enforce either unordered or ordered message delivery, giving developers the flexibility to optimize sequencing and execution based on their application needs.

It is also worth highlighting that LayerZero’s protocol design ensures that no messages can be lost, and no value can be tampered with in cross-chain transactions. Since the protocol is stateless, even in cases of network congestion or reorgs, messages may be delayed but are always successfully processed once conditions are met.

Solutions for GMX Built on LayerZero

LayerZero’s protocol enables seamless bridging, messaging, and execution of GMX-specific use cases. Below are the solutions tailored to GMX’s requirements:

1. $GMX as an Omnichain Fungible Token (OFT)

LayerZero does not enforce a specific token standard for cross-chain transfers, but the Omnichain Fungible Token (OFT) Standard is recommended—an extension of ERC20 and non-EVM equivalent—designed to meet GMX’s stated requirements. This common interface across all chains ensures ease of use while allowing for bespoke customizations, making it a seamless yet powerful standard for cross-chain asset transfers.

The OFT standard is the best-in-class model for bridging native assets across chains while maintaining full security, interoperability, and control. GMX has multiple options for implementing $GMX as an OFT:

• Native GMX Deployments on New Chains
  • Direct mint-and-burn functionality on new chains like Solana and TON, ensuring seamless movement of $GMX while keeping supply integrity.
  • GMX controls contract ownership and supply logic across all deployed networks.
• Mint-and-Burn Adapter Contracts for Existing Chains
  • On Arbitrum and Avalanche, where GMX is already live, adapter contracts can be deployed on LayerZero to interface with existing GMX contracts.
  • These contracts call burn and mint functions on the native GMX token contracts, ensuring native-level bridging without reliance on third-party wrappers or liquidity pools.

By utilizing the OFT standard, $GMX will benefit from the following:

• Universal Composability: Seamless interaction with smart contracts across all LayerZero supported chains.
• Unified Liquidity: A globally connected supply that eliminates liquidity fragmentation across chains.
• Security and Trust: Cross-chain communication with customizable validation through DVNs.
• Streamlined Inventory Management: Efficiently handle supply rebalancing without the need for traditional offchain third parties, inventory across multiple chains can be rebalanced permissionless via the LayerZero protocol for the price of gas vs. OTC or other permissioned methods.
• Customizable Fee Structures: Tailored fee models to optimize transfers and incentivize usage/flows.

2. Interoperability for GM Tokens & Issuers on GMX

If GMX intends to support issuers creating GM tokens that are natively interoperable, multiple LayerZero-powered solutions can be implemented:

• General Message Passing: Allows GMX to provide fully custom logic for messaging between chains, useful for governance or execution instructions.
• OFT for GM Tokens: Similar to $GMX, GM tokens issued on GMX’s platform can follow the OFT standard, which will benefit from the features mentioned above.
• Intents Model on LayerZero: If GMX seeks to enhance order execution and cross-chain interactions, an intents-based system can be built on LayerZero to execute trades, settle orders, or handle protocol transactions seamlessly across multiple chains.
• Liquidity Based Bridges: Stargate is an omnichain liquidity protocol built on LayerZero that facilitates the transfer of value across blockchains. Stargate allows users to transfer assets in a fully composable manner with unified liquidity. By leveraging LayerZero’s technology, Stargate ensures deep liquidity, minimal slippage, and seamless interoperability for DeFi applications, making it a possible solution for GM tokens and Issuers. Stargate has expressed interest in partnering with LayerZero here to best serve GMX.

3. lzRead and Governance

lzRead extends the existing omnichain messaging protocol to enable developers to not only send cross-chain messages, but also request and retrieve on-chain state from other supported blockchains.

This is particularly relevant to GMX holders in regard to cross-chain governance. LzRead is capable of retrieving voting power across any number of chains, allowing token holders to vote once on any chain, significantly simplifying cross chain governance. Agora has built a multichain governance module using lzRead, which could be made custom to fit GMX’s selected use case. This would be a joint collaboration between GMX, LayerZero and Agora.

Alternatively, custom governance solutions can also be designed and implemented utilizing lzRead, such as round-robin voting or other.

Each of these solutions provide exciting avenues for GMX, and will help in not only expanding the protocol to new ecosystems, but in functionality also. LayerZero is fully committed to scoping each of the solutions out with the GMX team directly to identify and implement the ideal solution for GMX.

3 | Bridging Fees and Costs

Reducing bridging fees

In regard to transferring $GMX as an OFT, the user will only ever be charged the gas fees, with no BPS attached. The gas cost for transferring GMX can of course be optimised to be as cheap as possible without introducing the risk of insufficient gas and inflight transaction failures.

Additionally, GMX can elect to run its own DVN for all GMX transfers, adding a level of protocol-owned security and control over cross-chain verification costs. Operating a DVN in-house is one way to decrease or eliminate any fees paid to outside parties.

DVNs also receive retroactive rewards in $ZRO tokens, distributed quarterly based on their performance metrics. Since all GM assets including GMX could use this DVN, it introduces a direct and transparent mechanism for redistributing the fees to users.

Costs

Development and deployment: $0

Co-marketing: $0

DVN pathway costs: Completely configurable depending on the DVN setup GMX selects. To send a message using LayerZero, users only pay gas from the source chain because of the unique gas abstraction service the executor runs. Below is a chart demonstrating the sample cost of passing a message using LayerZero v2 between a few widely-used pathways, featuring a 2-DVN setup of LayerZero Labs and Google:

• This is what it costs to send any message through these specific pathways, completely separate from dollar amount (fees don’t scale with volume bridged)
• The cost of any transaction equates to the cost of signing for a single message on each respective chain
• Projects that use LayerZero can customize their fee/security structure by choosing between 43 different DVNs, 42 of which are run by independent third parties such as Google, Polyhedra, Blockdaemon, and more
• GMX could choose to implement a bridging fee in the OFT contract logic if they so desired

4 | Timeline

Working Timeline

Milestone	Target Date	Status	Notes
Submission Deadline	2/21	In progress	GMX proposal window closes
Technical Review Complete	2/28	Not started	GMX concludes technical review
Governance Vote	3/31	Not started	GMX holds governance vote to determine interop provider
Working Plans & OFT Design	4/7	Not started	Outline scope of work, design and finalize OFT contract architecture
Co-marketing Planning	4/14	Not started	Discuss social media support thru X and Discord
Partnership Announcement	4/21	Not started	Announce the omnichain partnership between GMX and LayerZero
Phase 1 Deployments	4/24	Not started	Deploy OFT Contracts for Arbitrum, Avalanche, and other desired day-1 chains, with immediate bridging enabled
Phase 2 Planning	TBD	Not started	Discuss future OFT deployments to further chains, including non-EVM networks like TON and Solana
Phase 2 Deployments	TBD	Not started	Deploy OFT Contracts for additional chains, with co-marketing support

5 | Innovation and Special Features

LayerZero Messaging Features

Native Gas Drop

LayerZero’s native gas drop feature allows developers to include a specified amount of the destination chain’s native token in cross-chain messages. This creates a much improved developer experience by ensuring that the recipient contract or address on the destination chain receives the necessary funds to cover transaction fees or other operations, even if they don’t already hold the native token of that chain.

Message Design Patterns

LayerZero enables developers to configure any type of message design pattern, going beyond the standard source-to-destination (AB) pattern.

• ABA: a nested send call from Chain A to Chain B that sends back again to the source chain (A → B → A)
• Batch Send: a single send that calls multiple destination chains.
• Composed: a message that transfers from a source to destination chain and calls an external contract (A → B1 → B2)
• Composed ABA: transfers data from a source to destination, calls an external contract, and then calls back to the source (A → B1 → B2 → A)
• Message Ordering: enforce the ordered delivery of messages on execution post verification.
• Rate Limit rate limits the number of send calls for a given amount of messages or tokens transferred.

lzRead

lzRead is a request-response (i.e. query) data primitive built on LayerZero that enables seamless access to any on-chain data from any supported network with a single function call. It allows applications to retrieve, map, reduce, (i.e. compute) and securely deliver on-chain data while leveraging LayerZero’s existing immutable Endpoint and modular DVN infrastructure.

lzRead is already live on production mainnets, powering use cases such as:

• Wintermute & Chaos Labs – Wintermute’s prediction market for the U.S. presidential election used Chaos Labs’ oracle and lzRead to query results across multiple chains.
• Bored Ape Yacht Club (BAYC) – NFT collections use lzRead to read Ethereum ownership data from ApeChain.
• Azuki – Enables verification of Azuki NFT ownership on Ethereum L1 for claims on Anime Chain.
• LayerZero ZRO Referendum – Aggregates ZRO voting power across all chains, allowing users to vote once from any chain.

SyncPools

LayerZero’s Sync Pool architecture simplifies cross-chain liquidity management by securely synchronizing assets across different networks. It achieves this by using LayerZero messaging to keep the circulating supply on L2s in sync with the collateral pool on Ethereum, allowing assets to be issued on L2 quickly. At the same time, it batches user deposits on L2 to reduce transaction costs and leverages native L2 bridges for secure asset transfers. This solution is live and powers EtherFi’s weETH native L2 restaking.

Research

QMDB

Quick Merkle Database (QMDB) is a high-performance, verifiable database optimized for blockchains, offering significant advancements in scalability and performance. Highlights include:

• 2.28M state updates per second, 1M TPS (benchmarked transfers per second).
• Benchmarked with workloads up to 15B (10x Ethereum’s 2024 state) and proven capacity to scale to 280B entries on a single server.
• Single read per state access, O(1) I/O for updates, and in-memory Merkleization on a footprint as small as 2.3 bytes per entry.
• Efficiently scales across both consumer grade and enterprise hardware.
• Unlocks many novel use cases like historical proofs and real time ZK proof generation.

Delta Algorithm

The Delta Algorithm efficiently manages cross-chain liquidity by maintaining a unified pool on each blockchain, virtually divided into segments allocated to other connected chains. This dynamic allocation ensures that liquidity is available where needed, enabling seamless native asset transfers with instant guaranteed finality. The algorithm continuously monitors and adjusts these virtual partitions, redistributing funds to address any deficits and maintain balance across the network. This approach enhances capital efficiency and simplifies cross-chain transactions without relying on wrapped tokens. The Delta Algorithm is used by Stargate, one of the largest bridges in the industry.

Color Algorithms

LayerZero Labs solved the colored coins problem with the invention of a family of Color algorithms. Each algorithm solves the colored coins problem but with different variations. These coloring solutions are a way of tagging or marking a token’s metadata to identify from whom the tokens originate – precisely tracking a token’s lifecycle and associated on-chain activity. This unlocks accurately tracking fungible token ownership history: where, when, and by whom they were created and owned. Additionally, it enables pro-rata attributions, i.e., yield distributions, to holders of certain marked tokens, and creates a publicly transparent system where participants are fairly rewarded across blockchain ecosystems.

6 | Support for Bridging Multiple Tokens in a Single Bridge Txn (yes/no)

Yes, multiple tokens, such as WETH and USDC, can be bridged in a single bridge transaction using LayerZero as the messaging layer. Here is an example that bridges MOR and WETH from Arbitrum to Optimism in a single LayerZero message.

Liquidity bridging protocols built on top of LayerZero, such as Stargate have started to support GMX assets and bridging multiple in a single bridging transaction.

7 | Support for Bridging Tokens and a Message in a Single Bridge Txn without deployment of a contract on the source chain (yes/no)

It is possible to bridge message data and tokens in a single bridge transaction using LayerZero via a Composed Message; however, to handle a Composed Message on the destination chain using LayerZero’s protocol, there needs to be an additional Composer Receiver contract on the destination chain. The Composer Receiver contract is the contract interface to handle receiving the Composed Message and the custom business logic via the lzCompose. We strongly believe that all applications should own their specific Composer Receiver contracts or revoke ownership / burn the keys. We will work closely with GMX to gather requirements and fully scope out the most optimal solution and any related processes on behalf of the DAO’s implementation preference.

8 | Support for using “N of M” Bridges for Verification (yes/no)

Yes. LayerZero pioneered the concept of Decentralized Verifier Networks (DVNs) - entities that check the payload hash of an emitted message, ensuring the security of every cross chain transaction. LayerZero runs one of the 40+ DVNs, joining other third parties like Google, Blockdaemon, Nethermind, Polyhedra (ZK proof), Axelar (entire validator set), and many others. This modular security architecture allows for applications to run their own DVNs as well if desired to own the security infrastructure.

For GMX, this means the option of configuring their stack to utilize the CCIP, Axelar, and LayerZero DVNs if desired.

Note: The example OApp in the figure above has set their configuration threshold to have a total of 3 DVNs with 1 required DVN and 1-of-2 optional DVNs, needing 2-of-3 DVNs to verify their messages. The configured DVN threshold can be expanded out to any number of DVNs in a X-of-X and/or X-of-Y model.

9 | Bridging Cost & Speed

Cost

Because LayerZero works by passing data between a source and destination chain, only one chart is necessary to show the cost of bridging any OFT in any amount, whether a user is sending $10 or $10m of value between chains using USDT0, sUSDe, WBTC, or any other OFT. This can vary depending on the selection & number of DVNs used in an OFT’s specific security configuration, but here’s an example of what these pathway-specific costs would look like using a 2-DVN setup of LayerZero Labs and Horizon or Nethermind depending on the pathway:

Speed

This total median time until finality would vary depending on the specific DVN setup GMX chose to use for message verification, but across all of our pathways, the median time to pass a message between GMX’s specified chains is as follows:

10 | Final Thoughts

Due to a multitude of factors, we believe LayerZero to be the single best option for interoperability for GMX. The permissionless, immutable, and censorship-resistant nature of LayerZero makes it the most secure, decentralized, and modular message-passing protocol in defi, and with over 120 supported chains and over $100B in token value currently secured, our ecosystem continues to expand every day. LayerZero is extremely excited at the prospect of joining GMX in its quest to take both its token and platform omnichain.