LayerZero’s Bridged Token Draws Criticism from Protocols
Nine protocols from the Ethereum ecosystem have expressed their disapproval of the new bridged token from cross-chain protocol LayerZero. Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer and Router jointly issued a statement on Oct. 27 stating that the token’s standard is a “vendor-locked proprietary standard” that limits the freedom of token issuers.
The protocols argued that LayerZero’s token, called Wrapped Staked Ether (wstETH), is a proprietary representation of Lido Staked Ether (stETH) to Avalanche, BNB Chain, and Scroll, and is not supported by the Lido DAO. This, they claimed, creates “systemic risks for projects that can be tough to quantify.” The protocols advocated for the use of the xERC-20 token standard for bridging stETH instead of using LayerZero’s wstETH.
On Oct. 25, LayerZero launched wstETH on BNB Chain, Avalanche and Scroll, allowing stETH to be available on these three networks. Despite not needing the approval of the Lido DAO, both BNB Chain and LayerZero announced the token’s launch on X (formerly Twitter), tagging the Lido development team in the process. This led to members of the Lido DAO accusing them of attempting to mislead users into thinking that the new token had support from the DAO.
Coordinated Marketing Effort
On the same day that LayerZero launched wstETH, it proposed that the Lido DAO should approve the new token as the official version of stETH on the three new networks. It offered to transfer control of the token’s protocol to the Lido DAO, relinquishing LayerZero’s administration of it. In response, some Lido DAO members complained that this move was intended to create a fait accompli to pressure the DAO into passing the proposal when they otherwise wouldn’t have.
“There appears to have been a coordinated marketing effort between Avalanche, BNB, and LayerZero with a series of crypto alerts on Telegram and Twitter, as well as slick videos implying that the Lido DAO has already officially accepted the OFT standard,” Lido DAO member Hart Lambur posted to the forum, adding, “How is this possible when this is just a proposal?”
Some members also argued that the new token could pose security issues. “Layer Zero is a super centralized option that exposes Ethereum’s main protocol to an unprecedented catastrophe,” Lido DAO member Scaloneta claimed, arguing that a hack in the protocol’s verification layer “would imply that infinite wsteth will be minted.”
Cointelegraph reached out to the LayerZero team for comment through Telegram and email. In response, it claimed that the wstETH token’s protocol is secure and decentralized, stating:
LayerZero continued: “By design, developers always have the freedom to select their validation layer without restriction and can include other bridges as part of the immutable LayerZero framework.”
In April, LayerZero raised over $120 million to support the development of more cross-chain functionality for the Web3 ecosystem and joined forces with Radix to bring cross-chain features to the Radix Babylon network.
Subscribe to our email newsletter to get the latest posts delivered right to your email.
Comments