LayerZero moves to Google Cloud: A move away from decentralization?

Author: Darren Klein, Blockworks; Compiler: Songxue, Golden Finance

Ren Kong said this was “really big news that wasn’t discussed enough” at the Permissionless II conference.

It was previously reported that Google Cloud will act as an oracle provider for LayerZero, a permissionless protocol for relaying messages between blockchains. While Google Cloud is an add-on option, users can still choose other Web3 interoperability protocols, such as Chainlink, if needed.

Blockworks research analysts expressed concerns about the news on the 0xResearch Podcast (Spotify/Apple). **“Google Cloud is very, very far from being decentralized. It’s just a bunch of data servers that are probably 100% controlled by Google,” ** he said.

“When I first heard it, it was cool, but I didn’t know how I felt about it after thinking about it for a while.”

Kong said the argument for making Google Cloud an oracle is all about security. ** Kong explained that LayerZero’s answer to the security model question was: “Google is a big trillion-dollar tech company. They’re not going to bully you.”

Kong said this could be the case where a “big tech social consensus” controls desirable decentralized activities. ** “I’m not really sure what the point of using a blockchain institution is.”

**How does it work? **

Kong explains more details about how the system works. He said that two entities, oracles and relays, facilitate cross-chain messaging.

“The oracle is responsible for retrieving block headers,” he continued. “The relayer is responsible for obtaining the transaction identifier proof and then providing it to the endpoint.”

Kong explains that the message is unlocked when two elements arrive at the endpoint together and match each other. “Any trade that needs to be executed will be executed.”

When a LayerZero representative told Google that it would not run full nodes for supported LayerZero chains, Kong said he was confused. “It’s my understanding that you need to run a full node to extract block headers from the blockchain.”

“I’m not really sure what’s going on behind the scenes,” he said. “That’s another thing that worries me a little bit.”

Just not feeling sure

Kong said that, at least so far, the LayerZero security model is premised on the fact that the two roles of relayer and oracle are “completely different from each other.” If the two entities are allowed to collude with each other, “then you can do some malicious things with LayerZero,” Kong explained. “Right now, it looks pretty tightly integrated.”

“It just feels wrong, you know?”

“It feels like we’re just giving up on decentralization a little bit.”

Fiebach is impressed with Google’s progress in blockchain technology, noting that they have become a strong competitor to Alchemy in providing archived node data to Ethereum users. “They’re pretty mature at this point.”

“They’re going full speed into crypto,” Fiebach said, “and really want to be in this space — that’s really, really cool to see.”

Blockworks Research analyst Sam Martin noted that “this is just the default setting,” explaining that “you can still configure the oracle of your choice.”

“Google Cloud is partnering with a Web3 company, and they’re putting their reputation at risk in the process,” Martin said. “I think it’s a pretty huge risk.