Introduction to ZetaChain

Overview

ZetaChain is a blockchain that supports cross-chain smart contracts. It aims to connect various blockchains (both with and without smart contracts) to enable seamless interoperability. By introducing native cross-chain smart contracts, it supports a wide range of blockchain networks, including those like Ethereum and Solana with smart contracts and those like Bitcoin without smart contracts.

Team

ZetaChain’s core team comprises experts from leading industry companies and projects such as Brave, Coinbase, ConsenSys, THORChain, Cosmos, and 0x Labs. For instance, ZetaChain’s founder Ankur Nandwani was an early employee of Coinbase and one of the creators of the BAT token.

Leveraging their deep experience in the Web3 field and keen market insights, the team members have transformed their expertise into ZetaChain’s core strengths and technical direction, shaping the project’s strategic vision. They aim to simplify the development of decentralized applications while providing users with a smoother and faster experience, promoting the growth and development of the Web3 ecosystem.

Financing

ZetaChain has completed two funding rounds, with the second round raising $27 million in 2023. This round included investors such as Blockchain.com, Human Capital, VY Capital, Sky9 Capital, Jane Street Capital, VistaLabs, CMT Digital, Foundation Capital, Lingfeng Capital, GSR, Kudasai, and Krust.

Features and Technology of ZetaChain

ZetaChain is a decentralized cross-chain smart contract platform enabling seamless interaction between blockchain ecosystems. It aims to solve the fragmentation problem of blockchains through a unified, trustless, and permissionless system, allowing developers and users to operate across multiple blockchains.

Key features of ZetaChain include:

ZetaChain is an innovative blockchain solution built on the robust Cosmos SDK and Tendermint PBFT consensus mechanism, using a Proof of Stake (PoS) system. It is designed to promote interoperability between different blockchains.

In simple terms, ZetaChain uses a unique “chain-in-chain” architecture, implementing an advanced concept of “blockchain within blockchain” (BOB). This design cleverly integrates different independent blockchains like BTC and Ethereum into a unified ecosystem. This shares data and network resources and achieves deep integration at the levels of consensus, incentives, and smart contracts, bridging the gap between previously isolated blockchains and significantly enhancing the interaction and efficiency of the entire blockchain world.

For example, ZetaChain is designed to solve the fragmentation problem in the blockchain world. Suppose Alice has some Bitcoin (BTC) and Ether (ETH) and wants to transfer and trade these assets between different blockchains without using a centralized exchange or complex cross-chain bridging process. ZetaChain provides a unified platform where Alice can seamlessly manage and operate her BTC and ETH. The chain-in-chain architecture of ZetaChain allows different blockchains (like BTC and Ethereum) to be embedded into a unified ecosystem like pieces of a puzzle. Alice no longer needs to rely on third-party bridging services. Moreover, through ZetaChain’s smart contracts, Alice can directly complete transactions between BTC and ETH on one platform without operating separately on each blockchain.

Key Features

a. zEVM and Unified Logic and State for Decentralized Applications

zEVM is an execution environment compatible with the Ethereum Virtual Machine (EVM), supporting the creation and interaction of smart contracts and external chain calls to smart contracts. It can generate and send transactions to external chains.

Unlike other cross-chain messaging systems that require deployment and synchronization of state across multiple chains, ZetaChain allows dApps to maintain logic and state on a single zEVM, simplifying development and maintenance.

b. Cross-Chain Interoperability

ZetaChain’s validation nodes are equipped with observers to monitor relevant events on other blockchains, such as transaction logs or state changes. This allows its smart contracts to respond to external chain events and directly update the state of external chains without wrapping or bridging assets, enabling communication and interaction between different blockchains for cross-chain assets and information transfer.

ZetaChain also supports direct asset custody. Unlike systems that require wrapped or bridged assets, ZetaChain allows smart contracts to directly manage and use assets on external chains, such as Bitcoin and Ethereum. Signers on ZetaChain can directly initiate transactions on other blockchains.

c. Fast and Efficient Consensus

ZetaChain is built on the Cosmos SDK and Tendermint PBFT consensus engine, providing fast block times (about 5 seconds) and immediate finality (no block confirmations needed). The Tendermint engine can scale up to about 300 nodes in a production environment and can be upgraded to over 1000 nodes in the future.

Additionally, ZetaChain uses a Proof-of-Stake (PoS) consensus mechanism composed of validator nodes responsible for reaching consensus on external chain events and performing actions on other blockchains on behalf of ZetaChain.

Source: ZetaChain

Technical Implementation

a. Core Architecture

ZetaChain’s core architecture is designed around Validators, Observers, and Signers. Each role has unique responsibilities in maintaining the network and implementing cross-chain functionality.

Validators: Validators are the main participants in the ZetaChain network. They use the Tendermint consensus protocol and participate in the network consensus by staking ZETA tokens. Validators vote on external chain events submitted by observers to reach consensus and earn block rewards and other potential rewards such as transaction fees. Validators must be online 24/7 to participate in block production and network governance.

Observers: Observers monitor activities on external blockchains using their full nodes. They detect specific transactions, events, or state changes and report this information to ZetaChain, triggering state changes on ZetaChain. Observers are divided into Sequencers and Verifiers, where Sequencers discover and report external events, and Verifiers verify these reports and reach a consensus on ZetaChain. Observers can operate actively or passively to accommodate different needs and cost considerations.

Signers: Signers hold distributed key shares used to interact with external chains, using threshold signature schemes (TSS). Signers perform signing operations on behalf of ZetaChain on external chains, such as sending verified transactions to achieve cross-chain asset transfers. TSS allows ZetaChain to securely manage and operate assets on external chains like Bitcoin while maintaining decentralization. Signer operations ensure the security and atomicity of cross-chain asset transfers, preventing single points of failure.

b. Key Components

The technical architecture of ZetaChain is key to achieving cross-chain interoperability. It includes several key components:

TSS: ZetaChain uses TSS to generate and manage private keys distributed among multiple validators, ensuring decentralization and security. TSS allows signing on behalf of the network only when a certain number of signers agree.

For example, if a Bitcoin wallet usually requires a private key to control the Bitcoins, in the TSS scenario, the private key is divided into 5 shares held by 5 different people. None of them can control the Bitcoins alone, but if 3 or more people (exceeding the threshold) agree, they can jointly generate a valid signature to authorize the transfer of Bitcoins.

Omni-Chain Smart Contracts: Current cross-chain bridge solutions usually lock assets on the source chain (Chain A) and issue a corresponding number of wrapped assets on the target chain (Chain B). This method has issues such as liquidity lockup and asset loss.

ZetaChain proposes omni-chain smart contracts that allow smart contracts to directly manage and interact with assets on external chains and be callable by external chains. This eliminates the need to issue wrapped assets on the target chain, enhancing DeFi integration and increasing asset usability and flexibility in the DeFi ecosystem.

Specifically, in the omni-chain environment, ZetaChain serves as the settlement layer within the chain. When Chain A initiates a transfer to Chain B, Chain A settles with ZetaChain first. The settlement state is then synchronized to Chain B, which gains the usage rights of the corresponding ZRC20 token. This process eliminates asset loss and friction.

ZRC-20: ZRC-20 is a token standard integrated into ZetaChain. ZRC-20 tokens represent fungible assets on external chains, such as BNB and other ERC-20 tokens. They follow the same standards as ERC-20, enabling seamless collaboration with existing Ethereum-compatible wallets and trading platforms.

Using ZRC-20, developers can build DApps that support connecting native assets on other chains, making it extremely simple to develop omni-chain DeFi protocols and DApps as if they were all on one chain.

In specific usage, ERC-20 tokens that have passed the whitelist review can be deposited into ZetaChain as ZRC-20 tokens. During the deposit process, native ERC-20 tokens are transferred to and locked in TSS addresses/ERC-20 custody contracts. At the same time, corresponding ZRC-20 tokens are minted on ZetaChain and deposited into the recipient’s address.

ZRC-20 tokens can be withdrawn from ZetaChain to connected blockchains. During withdrawal, ZRC-20 tokens are burned on ZetaChain while native/ERC-20 tokens are transferred from TSS addresses/ERC-20 custody contracts to recipient addresses on connected chains.

Source: ZetaChain Doc

How to Get Involved with ZetaChain

ZetaHub

ZetaHub is the user interface and interaction platform within the ZetaChain ecosystem. It provides users with a series of functions allowing them to interact with and manage their assets on the ZetaChain network. The following are some key features of ZetaHub:

• Add ZetaChain Network to Wallet: Users can add the ZetaChain network to their wallets using EVM-compatible wallets (such as MetaMask) via ZetaHub, enabling them to view and use ZETA tokens in their wallets.
• Connect Wallet: Users can connect their wallets to ZetaHub to perform transactions and interactions.
• Obtain ZETA Tokens: ZetaHub provides methods for obtaining ZETA tokens. Users can acquire ZETA tokens through various means such as liquidity pools, mining, or purchasing.
• ZETA Token Staking: Users can select validators to delegate their ZETA tokens on ZetaHub to support network security and earn rewards.
• Explore Liquidity Pools: ZetaHub allows users to browse and participate in ZetaChain’s liquidity pools, providing liquidity to earn returns.
• Delegate/Stake ZETA: Users can find ZetaChain validators on ZetaHub and delegate their ZETA tokens to participate in the network consensus process.
• Join the Zeta XP Program: The Zeta XP Program allows users to participate and earn Zeta XP, a reward or incentive mechanism possibly related to network governance or specific activities.
• Earn Zeta XP: Users can earn Zeta XP by participating in specific activities on ZetaHub.
• Send Assets: ZetaHub provides a send page where users can move assets within or outside the ZetaChain network.
• Track Activities: ZetaHub provides a way to track user activities on the application, helping users monitor their transactions and asset status.

In summary, ZetaHub, as a portal for users to interact with ZetaChain, provides an intuitive and user-friendly interface, making it easier and more convenient to participate in the ZetaChain ecosystem. Through ZetaHub, users can manage their assets, participate in staking, utilize liquidity pools, and interact with other aspects of the ZetaChain network.

Source: ZetaChain

ZetaChain’s CLI

ZetaChain’s CLI is a command-line tool that allows users to interact with the ZetaChain network. First, users need to install the CLI from the ZetaChain Node GitHub repo, then create an account, and finally interact with ZetaChain for governance, balance inquiry, staking, and other interactions.

Source: ZetaChain

Ping Pub Explorer

Ping Pub is a blockchain explorer based on Cosmos. It has a dashboard that allows users to participate in governance, delegate tokens to validators, withdraw staking rewards, etc. Ping Pub supports Keplr, Leap, MetaMask, and Ledger. Users can choose the wallet they want and connect.

For staking, switch to the “Staking” tab to see the list of validators, including information about their commissions and voting power. Select the validator you want and click on the validator’s name. On the validator details page, users can view more information about the validator, including its jail status, self-bonded amount, address, website, etc. Press “Delegate” to delegate tokens to the validator.

Source: ZetaChain

After the Ping Hub popup window appears, users can enter the number of tokens they want to delegate, with the amount expressed in azeta. For example, to delegate 1 ZETA, enter 1000000000000000000. Finally, select “Send” and approve the transaction in the wallet to complete the staking.

Source: ZetaChain

ZetaChain Token

ZETA Token Economics

ZETA has an initial supply of 2.1 billion tokens, with plans to introduce about 2.5% annual inflation after approximately four years to support the network’s long-term development. To ensure the sustainability of the ZetaChain ecosystem, the tokens are distributed as follows:

• User Growth Pool (10%): To expand the user base through airdrops and community rewards.
• Ecosystem Growth Fund (12%): To support ecosystem development and assist partners and DApp developers.
• Validator Rewards (10%): Allocated to block rewards, transitioning to inflation-based rewards after the initial phase to ensure network security.
• Liquidity Incentives (5.5%): To promote liquidity in the core ZRC-20 fund pools, which is crucial for smooth value transfers.
• Treasury (24%): To fund operations, development, and ecosystem improvements.
• Core Contributors, Advisors, and Purchasers (22.5% and 16%): To reward individuals and entities that contribute to ZetaChain’s growth and development.

Source: ZetaChain

ZETA Token Use Cases

ZETA serves multiple purposes within the ZetaChain network. It acts as the fuel for the smart contract layer and internal transactions and is gradually burned through a mechanism similar to EIP 1559, affecting its supply.

ZETA plays a key role in the core pool, allowing protocols to exchange ZRC-20 fuel assets to support interactions with external chains, including paying fees for outbound transactions. ZETA tokens also act as intermediary assets for cross-chain communication, enabling dApps or users to send cross-chain messages by attaching ZETA and paying all related fees in one transaction.

Additionally, ZETA tokens are used as staking assets in the PoS blockchain. Validators and users maintain network security by staking or delegating ZETA and earning block rewards. Finally, ZETA holders can participate in network governance, voting on important issues such as policy upgrades and network development, and showcasing their influence on network decisions.

Conclusion

Compared to Axelar, another PoS chain that supports cross-chain messaging, ZetaChain can directly support native custody of EVM and omni-chain smart contracts. ZetaChain’s cross-chain interoperability helps address the fragmentation and interoperability issues in the blockchain world, enabling direct native interactions between blockchains without wrapping or bridging assets. The core technologies behind ZetaChain include a decentralized validator node network, omni-chain accounts, TSS, and omni-chain smart contracts and communication tools. These technologies enable ZetaChain to achieve cross-chain functionality and enhance transaction security and efficiency.

Furthermore, ZetaChain supports smart contract blockchains like Ethereum and non-smart contract blockchains like BTC, significantly enhancing the flexibility of multi-chain DApp development and deployment.

ZetaChain’s future roadmap includes programmable upgrades for Bitcoin, AI and data integration, EVM-compatible smart contracts, zero-knowledge proof dApps and asset verification, cross-chain value transfer, and the use of Cosmos SDK’s Proof-of-Stake consensus mechanism. The roadmap also includes developing core trust models, TSS-lib and Go-TSS, performance and robustness enhancements, and support for developer tools and SDKs.

Overall, ZetaChain has the potential to contribute significantly to the blockchain ecosystem by promoting multi-chain interoperability and developing new use cases and DApps. However, its success will depend on practicality, security, and scalability.