A new bridge token from the LayerZero cross-chain protocol is drawing criticism from nine protocols across the Ethereum ecosystem. A joint statement from Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer and Router on October 27 called the token standard “a vendor-locked proprietary standard,” claiming it limits the freedom of token issuers. tokens.
Today we announce a unified call for
Open bridge standards
next to @AcrossProtocol @CelerRed @ChainSafeth @buildwithsygma @lifiprotocol @SocketDotTech @routerprotocol and @hashialliance pic.twitter.com/D4CLw2lBD1—Connext (@ConnextNetwork) October 27, 2023
The protocols stated in their joint statement that the new LayerZero token is “a proprietary representation of wstETH for Avalanche, BNB Chain, and Scroll without support from the Lido DAO.” [decentralized autonomous organization]”, which is created by “vendor-specific systems […] fundamentally property of the bridges that implement them.” As a result, it creates “systemic risks to projects that can be difficult to quantify,” they said. The protocols advocated for Using the xERC-20 token standard to bind stETH instead of using the new LayerZero token.
Lido Staked Ether (stETH) is a derivative of liquid participation produced when a user deposits Ether (ETH) in the Lido protocol for betting. On October 25, LayerZero thrown out a bridge version of stETH, called "Wrapped Staked Ether (wstETH)" on BNB Chain, Avalanche and Scroll. Prior to this launch, stETH was not available on these three networks.
Since any protocol can create a bridge version of a token, LayerZero was able to launch wstETH without needing approval from Lido's governing body, LidoDAO. Additionally, both BNB Chain and LayerZero announced the launch of the token on X (formerly Twitter) and BNB Chain. labelled the Lido development team in their announcement. LidoDAO members later claimed that these actions were an attempt to trick users into believing that the new token was supported by the DAO.
The same day LayerZero launched wstETH, proposed that LidoDAO should approve the new token as the official version of stETH on the three new networks. They offered to transfer control of the token protocol to LidoDAO, relinquishing LayerZero's management of it. In response, some LidoDAO members complained that this measure was aimed at creating a fait accompli to pressure the DAO to approve the proposal when they otherwise would not have done so.
Related: LayerZero Partners with Immunefi to Launch $15 Million Bug Bounty
“There appears to have been a coordinated marketing effort between Avalanche, BNB, and LayerZero with a series of Twitter posts and clever videos implying that LidoDAO has now officially accepted the OFT standard,” LidoDAO member Hart Lambur. aware to the forum, adding "How is this possible when this is just a proposal?”
Some members also argued that the new token could raise security issues. “Layer Zero is a super-centralized option that exposes the main Ethereum protocol to unprecedented catastrophe,” LidoDAO member Scaloneta reclaimedarguing that a hack into the protocol's verification layer "would mean that infinite goods will be generated."
Cointelegraph reached out to the LayerZero team for comment via Telegram and email but did not receive a response at the time of publication. In April, LayerZero raised more than $120 million to help build more cross-chain functionality in the Web3 ecosystem and associated with Radix to bring cross-chain functionality to the Radix Babylon network.
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