OFTs: Omnichain Isn't Feeling Omni Right Now

Crypto is already too technical. Read this if you detest technical bluff and are curious on how your user experience could be improved on the internet with OFTs and if it truly preaches decentralisation. Forget NFTs for a second. There's a new shiny tech in town. It's called OFTs. OFTs. Like NFTs, we were promised some sort of decentralization, which exists in the unchangeable and transparent nature of the token that shows who owns the NFT item per time and hands it has passed through. All of this with the data being change proof. For OFTs, we are promised decentralization through trustless transfers which are made across different chains. decentralization, trustless The idea of decentralization was first introduced through the Cypherpunk mailing list in 1996, based on the belief that privacy is a fundamental human right and that writing coded programs (cryptography) was a key way to achieve it. Cypherpunk mailing list in 1996 More than a decade later, Satoshi introduced an anonymous way to send money through Bitcoin. At the time, the idea, which bypassed traditional barriers like banks, was brilliant but basic. Vitalik, at the time a writer for Bitcoin Magazine, believed that decentralization could go far beyond just sending money and could be used to build applications. But then, Bitcoin’s code couldn't be easily altered to fulfil this mission so he came up with his own blockchain —Ethereum. Bitcoin Magazine But this created new limitations. Each blockchain (over 150 of them), have their own native language, which makes it difficult for them to communicate with other chains outside their ecosystem. That is simply how they are built. With this, data and liquidity became fragmented. Sending crypto within the same blockchain, like Bitcoin to Bitcoin is simple. But moving between chains, like Ethereum to Bitcoin, doesn't work directly. Instead, you need a bridge. This works by locking the asset on one chain and issuing a copy on the other. Sometimes a token swap is involved, and fees always apply. Bridging has downsides. It's slow, costly, and risky since funds sit in smart contracts or pools, vulnerable to attacks. Wrapping is another option. You lock your Bitcoin and get WBTC on Ethereum, giving you the same value on a different chain. But WBTC isn't real BTC. It's a token backed by locked Bitcoin. It only works where supported, and moving it elsewhere requires unwrapping and going through a custodian again. bridge Wrapping All these flaws point to one thing: “blockchains cannot easily interact with one another”. This is exactly why the omnichain fungible token (OFT) exists. It allows a token to exist freely across multiple blockchains beyond its native chain. To better understand this, see it as : siblings from the same parents living freely in one another's homes. OFTs also provide a faster and cost-effective alternative to bridging tokens. But does this truly promote decentralization, or does it lean more toward centralization? blockchains cannot easily interact with one another siblings from the same parents living freely in one another's homes. decentralization, centralization What makes OFTs attractive? The future of OFTs I dare say is massive because it could further make relatable “consumer crypto”. With OFTs, the blockchain layer could be completely abstracted. Let's use a game to understand this: You wouldn't necessarily care if your game item is currently on Ethereum, Polygon, or Arbitrum. It will simply show up as part of your assets in the game. Games won’t be stuck on one blockchain. They won’t be limited by the users, liquidity, or features of a single chain. Developers could use different chains for different strengths. For example, Ethereum for security, Solana for speed and cheaper storage without players knowing anything about it. Expect more games to launch on multiple blockchains, since they will now rely on the strengths of each one. This approach is known as being chain agnostic— building to work across many chains, not just one. Eventually, we wouldn’t need to say “web3 game” or “onchain game”. It will simply just be a game categorized under its niche. You wouldn't necessarily care if your game item is currently on Ethereum, Polygon, or Arbitrum. It will simply show up as part of your assets in the game. Games won’t be stuck on one blockchain. They won’t be limited by the users, liquidity, or features of a single chain. Developers could use different chains for different strengths. For example, Ethereum for security, Solana for speed and cheaper storage without players knowing anything about it. Expect more games to launch on multiple blockchains, since they will now rely on the strengths of each one. This approach is known as being chain agnostic— building to work across many chains, not just one. Eventually, we wouldn’t need to say “web3 game” or “onchain game”. It will simply just be a game categorized under its niche. You see, OFTs could be a big deal which is why some projects like SushiSwap and Stargate are jumping in early. SushiSwap Stargate How you could use OFTs as an internet user The major idea of OFTs is to securely pass assets and data to another blockchain without a third party involved. See how this would play out in different scenarios: assets data A decentralized ride sharing app: Let drivers register and store identity on Ethereum Handle payments on Solana due to low fees. Log trip data and reviews on Avalanche, all seamlessly in one interface without users needing to bridge or switch networks. A decentralized Web3 game: Let users mint items on Ethereum Trade them on Arbitrum Use them in battles on Ronin, all without leaving the app or manually bridging. Cross-chain identity verification for a decentralized protocol Store user credentials on Ethereum Verify KYC attestations on zkSync Let dApps on Base or Optimism instantly access verified identity without duplicating data or making users re-verify. How OFTs work behind the scene OFTs are powered by a protocol called LayerZero. LayerZero lets blockchains talk to each other by passing messages, not actual tokens. Instead of "sending" tokens, LayerZero tells the token contracts to update balances across chains. There are two main ways this happens: 1. For new omnichain tokens, burn and mint The token is burned on Chain A and created (minted) on Chain B. The total supply doesn’t change. 2. For existing omnichain token, lock and mint The token is locked on Chain A and a copy is minted on Chain B. To move it back, the copy is burned and the original is unlocked. Can OFTs deliver a decentralized internet? This segment will critique with zero technical jargon how LayerZero may hinder true decentralization. As mentioned earlier, OFTs were introduced by LayerZero, a messaging protocol that lets apps send data and messages without relying on bridges. Since the protocol doesn't rely on bridges, it relies on something else — relayer and oracle. The relayer carries the message from one chain’s endpoint to another while the oracle confirms that the message really happened on the source chain before it's accepted on the destination. The core tenets of a decentralized internet are : privacy, trust, control, ownership and transparency. What this means is: Privacy - your data is yours Trust - verified through code not corporations Control - you govern your data and how it is used. Transparency - the system is open for everyone to see Ownership - run for the people, by the people Do OFTs pass this vibe check? 1. Trust issues Remember, OFTs need LayerZero to move tokens or pass messages between blockchains. Each app is expected to pick the two key roles : oracle and relayer. These two roles are supposed to be separate, but most projects choose one party for both. This means one single party can control what gets verified and what messages get passed across chains. That is not trust through code. That is trust through humans. The authenticity is stunted. 2. Control and ownership are not guaranteed Users don’t control how messages move between chains. Instead, that’s handled by the oracle and relayer chosen by the app. If either one is compromised, users can’t stop it and they may not know it happened. A system that relies on chosen verifiers and lacks public consensus is not fully owned by the people. It gives too much control to those who run the relayers and oracles. This is not the same as validator-based systems like Cosmos IBC, where the whole network agrees on messages. 3. Limited transparency Many devs have also critiqued the transparency of OFTs’ pioneer stating that the documentation doesn't clearly explain all moving parts. This leaves users and builders in the dark about how messages are really verified. One developer even said “LayerZero markets itself well but avoids hard questions about its internal setup”. That is not how an open system should be. Final thoughts I strongly believe omnichain could be the future and play a big role in scaling crypto adoption. But for that to happen, the decentralization gaps need to be fixed and that responsibility sits with the project behind it: LayerZero. A decentralized ride sharing app: Let drivers register and store identity on Ethereum Handle payments on Solana due to low fees. Log trip data and reviews on Avalanche, all seamlessly in one interface without users needing to bridge or switch networks. A decentralized ride sharing app Let drivers register and store identity on Ethereum Handle payments on Solana due to low fees. Log trip data and reviews on Avalanche, all seamlessly in one interface without users needing to bridge or switch networks. Let drivers register and store identity on Ethereum Let drivers register and store identity on Ethereum Handle payments on Solana due to low fees. Handle payments on Solana due to low fees. Log trip data and reviews on Avalanche, all seamlessly in one interface without users needing to bridge or switch networks. Log trip data and reviews on Avalanche, all seamlessly in one interface without users needing to bridge or switch networks. A decentralized Web3 game: Let users mint items on Ethereum Trade them on Arbitrum Use them in battles on Ronin, all without leaving the app or manually bridging. A decentralized Web3 game Let users mint items on Ethereum Trade them on Arbitrum Use them in battles on Ronin, all without leaving the app or manually bridging. Let users mint items on Ethereum Let users mint items on Ethereum Trade them on Arbitrum Trade them on Arbitrum Use them in battles on Ronin, all without leaving the app or manually bridging. Use them in battles on Ronin, all without leaving the app or manually bridging. Cross-chain identity verification for a decentralized protocol Store user credentials on Ethereum Verify KYC attestations on zkSync Let dApps on Base or Optimism instantly access verified identity without duplicating data or making users re-verify. How OFTs work behind the scene OFTs are powered by a protocol called LayerZero. LayerZero lets blockchains talk to each other by passing messages, not actual tokens. Instead of "sending" tokens, LayerZero tells the token contracts to update balances across chains. There are two main ways this happens: 1. For new omnichain tokens, burn and mint The token is burned on Chain A and created (minted) on Chain B. The total supply doesn’t change. 2. For existing omnichain token, lock and mint The token is locked on Chain A and a copy is minted on Chain B. To move it back, the copy is burned and the original is unlocked. Can OFTs deliver a decentralized internet? This segment will critique with zero technical jargon how LayerZero may hinder true decentralization. As mentioned earlier, OFTs were introduced by LayerZero, a messaging protocol that lets apps send data and messages without relying on bridges. Since the protocol doesn't rely on bridges, it relies on something else — relayer and oracle. The relayer carries the message from one chain’s endpoint to another while the oracle confirms that the message really happened on the source chain before it's accepted on the destination. The core tenets of a decentralized internet are : privacy, trust, control, ownership and transparency. What this means is: Privacy - your data is yours Trust - verified through code not corporations Control - you govern your data and how it is used. Transparency - the system is open for everyone to see Ownership - run for the people, by the people Do OFTs pass this vibe check? 1. Trust issues Remember, OFTs need LayerZero to move tokens or pass messages between blockchains. Each app is expected to pick the two key roles : oracle and relayer. These two roles are supposed to be separate, but most projects choose one party for both. This means one single party can control what gets verified and what messages get passed across chains. That is not trust through code. That is trust through humans. The authenticity is stunted. 2. Control and ownership are not guaranteed Users don’t control how messages move between chains. Instead, that’s handled by the oracle and relayer chosen by the app. If either one is compromised, users can’t stop it and they may not know it happened. A system that relies on chosen verifiers and lacks public consensus is not fully owned by the people. It gives too much control to those who run the relayers and oracles. This is not the same as validator-based systems like Cosmos IBC, where the whole network agrees on messages. 3. Limited transparency Many devs have also critiqued the transparency of OFTs’ pioneer stating that the documentation doesn't clearly explain all moving parts. This leaves users and builders in the dark about how messages are really verified. One developer even said “LayerZero markets itself well but avoids hard questions about its internal setup”. That is not how an open system should be. Final thoughts I strongly believe omnichain could be the future and play a big role in scaling crypto adoption. But for that to happen, the decentralization gaps need to be fixed and that responsibility sits with the project behind it: LayerZero. Cross-chain identity verification for a decentralized protocol Store user credentials on Ethereum Verify KYC attestations on zkSync Let dApps on Base or Optimism instantly access verified identity without duplicating data or making users re-verify. How OFTs work behind the scene OFTs are powered by a protocol called LayerZero. LayerZero lets blockchains talk to each other by passing messages, not actual tokens. Instead of "sending" tokens, LayerZero tells the token contracts to update balances across chains. There are two main ways this happens: 1. For new omnichain tokens, burn and mint The token is burned on Chain A and created (minted) on Chain B. The total supply doesn’t change. 2. For existing omnichain token, lock and mint The token is locked on Chain A and a copy is minted on Chain B. To move it back, the copy is burned and the original is unlocked. Can OFTs deliver a decentralized internet? This segment will critique with zero technical jargon how LayerZero may hinder true decentralization. As mentioned earlier, OFTs were introduced by LayerZero, a messaging protocol that lets apps send data and messages without relying on bridges. Since the protocol doesn't rely on bridges, it relies on something else — relayer and oracle. The relayer carries the message from one chain’s endpoint to another while the oracle confirms that the message really happened on the source chain before it's accepted on the destination. The core tenets of a decentralized internet are : privacy, trust, control, ownership and transparency. What this means is: Privacy - your data is yours Trust - verified through code not corporations Control - you govern your data and how it is used. Transparency - the system is open for everyone to see Ownership - run for the people, by the people Do OFTs pass this vibe check? 1. Trust issues Remember, OFTs need LayerZero to move tokens or pass messages between blockchains. Each app is expected to pick the two key roles : oracle and relayer. These two roles are supposed to be separate, but most projects choose one party for both. This means one single party can control what gets verified and what messages get passed across chains. That is not trust through code. That is trust through humans. The authenticity is stunted. 2. Control and ownership are not guaranteed Users don’t control how messages move between chains. Instead, that’s handled by the oracle and relayer chosen by the app. If either one is compromised, users can’t stop it and they may not know it happened. A system that relies on chosen verifiers and lacks public consensus is not fully owned by the people. It gives too much control to those who run the relayers and oracles. This is not the same as validator-based systems like Cosmos IBC, where the whole network agrees on messages. 3. Limited transparency Many devs have also critiqued the transparency of OFTs’ pioneer stating that the documentation doesn't clearly explain all moving parts. This leaves users and builders in the dark about how messages are really verified. One developer even said “LayerZero markets itself well but avoids hard questions about its internal setup”. That is not how an open system should be. Final thoughts I strongly believe omnichain could be the future and play a big role in scaling crypto adoption. But for that to happen, the decentralization gaps need to be fixed and that responsibility sits with the project behind it: LayerZero. Store user credentials on Ethereum Store user credentials on Ethereum Verify KYC attestations on zkSync Verify KYC attestations on zkSync Let dApps on Base or Optimism instantly access verified identity without duplicating data or making users re-verify. How OFTs work behind the scene OFTs are powered by a protocol called LayerZero. LayerZero lets blockchains talk to each other by passing messages, not actual tokens. Instead of "sending" tokens, LayerZero tells the token contracts to update balances across chains. There are two main ways this happens: 1. For new omnichain tokens, burn and mint The token is burned on Chain A and created (minted) on Chain B. The total supply doesn’t change. 2. For existing omnichain token, lock and mint The token is locked on Chain A and a copy is minted on Chain B. To move it back, the copy is burned and the original is unlocked. Can OFTs deliver a decentralized internet? This segment will critique with zero technical jargon how LayerZero may hinder true decentralization. As mentioned earlier, OFTs were introduced by LayerZero, a messaging protocol that lets apps send data and messages without relying on bridges. Since the protocol doesn't rely on bridges, it relies on something else — relayer and oracle. The relayer carries the message from one chain’s endpoint to another while the oracle confirms that the message really happened on the source chain before it's accepted on the destination. The core tenets of a decentralized internet are : privacy, trust, control, ownership and transparency. What this means is: Privacy - your data is yours Trust - verified through code not corporations Control - you govern your data and how it is used. Transparency - the system is open for everyone to see Ownership - run for the people, by the people Do OFTs pass this vibe check? 1. Trust issues Remember, OFTs need LayerZero to move tokens or pass messages between blockchains. Each app is expected to pick the two key roles : oracle and relayer. These two roles are supposed to be separate, but most projects choose one party for both. This means one single party can control what gets verified and what messages get passed across chains. That is not trust through code. That is trust through humans. The authenticity is stunted. 2. Control and ownership are not guaranteed Users don’t control how messages move between chains. Instead, that’s handled by the oracle and relayer chosen by the app. If either one is compromised, users can’t stop it and they may not know it happened. A system that relies on chosen verifiers and lacks public consensus is not fully owned by the people. It gives too much control to those who run the relayers and oracles. This is not the same as validator-based systems like Cosmos IBC, where the whole network agrees on messages. 3. Limited transparency Many devs have also critiqued the transparency of OFTs’ pioneer stating that the documentation doesn't clearly explain all moving parts. This leaves users and builders in the dark about how messages are really verified. One developer even said “LayerZero markets itself well but avoids hard questions about its internal setup”. That is not how an open system should be. Final thoughts I strongly believe omnichain could be the future and play a big role in scaling crypto adoption. But for that to happen, the decentralization gaps need to be fixed and that responsibility sits with the project behind it: LayerZero. Let dApps on Base or Optimism instantly access verified identity without duplicating data or making users re-verify. How OFTs work behind the scene How OFTs work behind the scene OFTs are powered by a protocol called LayerZero. LayerZero lets blockchains talk to each other by passing messages, not actual tokens. Instead of "sending" tokens, LayerZero tells the token contracts to update balances across chains. LayerZero. LayerZero There are two main ways this happens: 1. For new omnichain tokens, burn and mint 1. For new omnichain tokens, burn and mint The token is burned on Chain A and created (minted) on Chain B. The total supply doesn’t change. 2. For existing omnichain token, lock and mint 2. For existing omnichain token, lock and mint The token is locked on Chain A and a copy is minted on Chain B. To move it back, the copy is burned and the original is unlocked. Can OFTs deliver a decentralized internet? This segment will critique with zero technical jargon how LayerZero may hinder true decentralization. As mentioned earlier, OFTs were introduced by LayerZero, a messaging protocol that lets apps send data and messages without relying on bridges. Since the protocol doesn't rely on bridges, it relies on something else — relayer and oracle. The relayer carries the message from one chain’s endpoint to another while the oracle confirms that the message really happened on the source chain before it's accepted on the destination. LayerZero, relayer oracle The core tenets of a decentralized internet are : privacy, trust, control, ownership and transparency. : privacy, trust, control, ownership transparency. What this means is: What this means is: Privacy - your data is yours Trust - verified through code not corporations Control - you govern your data and how it is used. Transparency - the system is open for everyone to see Ownership - run for the people, by the people Privacy - your data is yours Trust - verified through code not corporations Control - you govern your data and how it is used. Transparency - the system is open for everyone to see Ownership - run for the people, by the people Do OFTs pass this vibe check? Do OFTs pass this vibe check? 1. Trust issues 1. Trust issues Remember, OFTs need LayerZero to move tokens or pass messages between blockchains. Each app is expected to pick the two key roles : oracle and relayer. These two roles are supposed to be separate, but most projects choose one party for both. This means one single party can control what gets verified and what messages get passed across chains. That is not trust through code. That is trust through humans. The authenticity is stunted. LayerZero 2. Control and ownership are not guaranteed 2. Control and ownership are not guaranteed Users don’t control how messages move between chains. Instead, that’s handled by the oracle and relayer chosen by the app. If either one is compromised, users can’t stop it and they may not know it happened. A system that relies on chosen verifiers and lacks public consensus is not fully owned by the people. It gives too much control to those who run the relayers and oracles. This is not the same as validator-based systems like Cosmos IBC, where the whole network agrees on messages. 3. Limited transparency 3. Limited transparency Many devs have also critiqued the transparency of OFTs’ pioneer stating that the documentation doesn't clearly explain all moving parts. This leaves users and builders in the dark about how messages are really verified. One developer even said “LayerZero markets itself well but avoids hard questions about its internal setup”. That is not how an open system should be. LayerZero markets itself well but avoids hard questions about its internal setup”. Final thoughts I strongly believe omnichain could be the future and play a big role in scaling crypto adoption. But for that to happen, the decentralization gaps need to be fixed and that responsibility sits with the project behind it: LayerZero. LayerZero