Original | Odaily Planet Daily
Author | Azuma
On October 26, the cross-chain interoperability protocol LayerZero announced on its official X account that it has launched a “full-chain version” (OFT) for Lido Finance’s liquidity staking derivative token wstETH, allowing the token to be freely transferred across Ethereum, Avalanche, BNB Chain, and Scroll using LayerZero’s communication protocol.
After the announcement was made, Avalanche, BNB Chain and other parties involved in the event followed up with "congratulations" on social media. It seems that this is a formal cooperation between the head protocols, and it seems that Lido wants to use LayerZero to expand into more new ecosystems.
However, as time went on, things began to develop in an unexpected direction. The first to raise different opinions were from within the Lido community, where many community members pointed out on social media that LayerZero's deployment was not recognized by Lido DAO, and emphasized that OFT wstETH, endorsed by a third-party protocol (LayerZero), was used as the "official" version of multiple popular ecosystems with different architectures. This design itself and its promotion process were not reasonable.
First level of doubt: Security issues of the OFT model itself
The first level of questioning focuses on the security issues of the OFT model itself.
Community member @arixoneth believes that, aside from Layer 1s such as Avalanche and BNB Chain, Scroll, as a Layer 2 network with a zk-Rollup architecture, the safest way to introduce mainnet assets should be through the Rollup native bridge rather than using a third-party bridge protocol. Sacrificing security in exchange for a certain amount of liquidity is not worth it.
Community member @hal2001 said that the OFT model uses a "minting/destruction" architecture based on authorized smart contracts, which means there may be some potential loopholes that lead to unauthorized unlimited minting of wstETH. Considering the importance of wstETH itself to the Ethereum ecosystem, if the model is destroyed and a large amount of wstETH is incorrectly minted, it will easily trigger a large amount of redemption and selling of ETH itself, thereby destroying the foundation of the ecosystem.
Hart Lambur, founder of the decentralized interoperability protocol Across Protocol, also wrote on X Platform: “In mid-September, I criticized LayerZero’s decision to use Google’s centralized oracle as the default option, especially as they continue to promote their services as ‘decentralized’. Recently, LayerZero once again used the same centralized Google oracle to deploy an unauthorized wstETH bridge and marketed it as the ‘official’ (decentralized) version, which made many members of the Lido community uneasy. LayerZero has a history of high-profile marketing of products but is unwilling to discuss the technical details and considerations behind them. This is not good for our industry, and I am tired of this behavior.”
Represented by the above views, a large number of community members have raised security concerns about the OFT model and emphasized that Lido DAO contributors and external security experts have not yet conducted a thorough security assessment of LayerZero’s solution, including architecture analysis, impact assessment of core protocols, and review of deployment artifacts and governance mechanisms.
Second level of doubt: procedural errors in governance promotion
In addition to the design of the solution itself, more questions within the community focus on procedural errors in LayerZero’s governance advancement.
According to normal governance procedures, the initiator of the proposal should advance the deployment after the content of the proposal has been fully discussed and recognized by the community. However, LayerZero immediately "officially announced" the launch of OFT wstETH after initiating the proposal, and jointly promoted it with Avalanche, BNB Chain and some media. This operation is suspected of using PR to hijack community governance.
Community member @hal2001 believes that LayerZero, Avalanche, and BNB Chain seem to have reached an agreement on the marketing of this event, aiming to make the community think that Lido DAO has officially accepted the OFT standard, but this is not the case. This is just a preliminary proposal.
Lido strategic advisor @Hasu said he was “speechless”. First, the deployment was completed unilaterally, and then marketing was carried out through official channels. It felt like forcing Lido DAO to accept the proposal. Even if there is no problem with LayerZero’s plan itself, it needs to be fully discussed within the community and allow the community to select from multiple plans. There is an error in the order of advancement of this matter.
Community member @Scaloneta also "angrily" said that officially announcing something that has not even been voted on as if it has become a reality is disrespectful to Lido DAO and also makes it clear that LayerZero itself is not serious enough.
The collective counterattack of friendly competitors
While the Lido community is collectively bombarding LayerZero, the major cross-chain protocols are also not idle. Seeing LayerZero grabbing market share in such an "unethical" way, they will naturally not sit idly by.
In addition to the aforementioned founder of Across Protocol, Hart Lambur, the first to take action was Georgios Vlachos, co-founder of Axelar Network, who proposed a competing proposal from Axelar Network under LayerZero’s proposal discussion post and has received support from some community members.
Subsequently, Chainlink Labs product marketing manager Michael Robinson also proposed a competing proposal based on the cross-chain interoperability protocol CCIP.
In the early hours of this morning, eight major projects including Connext Network, ChainSafe, Sygma, Li.Fi, Socket, Across Protocol, Celer, and Router jointly issued a statement, angrily criticizing LayerZero for being "unethical" and calling for the construction of an open cross-chain bridging standard.
Decentralized resilience
All in all, LayerZero’s strategy this time backfired, ultimately sparking the collective anger of the Lido community and industry peers.
As of the time of writing, LayerZero’s latest response on this matter is: first, it agrees with the community’s view that the Rollup native bridge is more secure and is willing to cancel the bridge support for Scroll; second, it is willing to hand over the ownership of the Avalanche and BNB Chain bridge contracts to Lido DAO, thereby allowing the DAO to control various configurations.
Looking back at the whole incident, although LayerZero’s behavior is indeed “dramatic”, we are more impressed by the performance of Lido DAO in this incident. Although LayerZero mentioned in its latest response that it has been discussing the plan with the Lido core team in recent months, it can be seen that the community does not care whether you have received the “imperial edict”, and more community members are still focusing on the plan and the program itself.
Perhaps this is the resilience of decentralization.
