A new bridged token from cross-chain protocol LayerZero is drawing criticism from nine protocols throughout the Ethereum ecosystem. A joint statement from Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer and Router on Oct. 27 called the token’s standard “a vendor-locked proprietary standard,” claiming that it limits the freedom of token issuers.
– Nine protocols in the Ethereum ecosystem criticize LayerZero’s wstETH token.
– The protocols claim that the token’s standard is “a vendor-locked proprietary standard” that restricts the freedom of token issuers.
The protocols claimed in their joint statement that LayerZero’s new token is “a proprietary representation of wstETH to Avalanche, BNB Chain, and Scroll without support from the Lido DAO [decentralized autonomous organization],” which is created by “provider-specific systems […] fundamentally owned by the bridges that implement them.” As a result, it creates “systemic risks for projects that can be tough to quantify,” they stated.
– The protocols criticize LayerZero’s wstETH token for being a proprietary representation without the support of Lido DAO.
– They argue that this creates systemic risks for projects that are difficult to quantify.
The protocols advocated for the use of the xERC-20 token standard for bridging stETH instead of using LayerZero’s new token.
– The protocols suggest using the xERC-20 token standard for bridging stETH instead of LayerZero’s token.
Lido Staked Ether (stETH) is a liquid staking derivative produced when a user deposits Ether (ETH) into the Lido protocol for staking. On Oct. 25, LayerZero launched a bridged 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.
– LayerZero launched a bridged version of stETH, called wstETH, on BNB Chain, Avalanche, and Scroll.
– Previously, stETH was not available on these networks.
Since any protocol can create a bridged version of a token, LayerZero was able to launch wstETH without needing the approval of Lido’s governing body, the Lido DAO. In addition, both BNB Chain and LayerZero announced the token’s launch on X (formerly Twitter), and BNB Chain tagged the Lido development team in its announcement. Members of the Lido DAO later claimed that these actions were an attempt to mislead users into believing that the new token had support from the DAO.
– LayerZero was able to launch wstETH without needing approval from Lido DAO.
– BNB Chain and LayerZero announced the token’s launch on X and tagged the Lido development team, which some members claim was misleading.
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.
– LayerZero proposed that Lido DAO should approve wstETH as the official version of stETH on the new networks.
– Some Lido DAO members criticized this move as an attempt to pressure the DAO into passing the 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.”
– Some members believe that LayerZero’s token could have security issues and expose Ethereum’s main protocol to significant risks.
Coinpostman 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.
– Coinpostman contacted LayerZero for comment, and the team claimed that the wstETH token’s protocol is secure and decentralized.
