LayerZero faces joint condemnation from peers, revealing the true business competition behind cross-chain bridges.
LayerZero's move quickly caught the industry's attention. The reason behind it is the integration of wstETH with LayerZero Omnichain Fungible Token (OFT) standard. Omnichain Fungible Tokens (OFT) is a new full-chain token standard introduced by LayerZero, which has been adopted by Avalanche, PancakeSwap, and Trader Joe.
According to LayerZero, the OFT standard provides a more user-friendly and efficient cross-chain transfer solution. It is a new scalable token standard (similar to ERC-20) that allows tokens to be externally composited in any type of dApp and any DeFi ecosystem. This means that tokens now have a unified standard across all protocols and blockchains, allowing users to seamlessly exchange and use tokens on any dApp on any chain.
OFT has two versions, v1 and v2. The main difference between these two versions is that v2 can support non-EVM chains such as Aptos. In addition, there are also OFNT721 and OFNT1155 that support Omnichain NFT. Besides Avalanche, PancakeSwap, and Trader Joe, many projects currently adopt Layerzero's OFT standard, such as Ethereum layer2 Metis, Multichain stablecoin MIM, CDP protocol TapiocaDAO, Wrapped Bitcoin protocol BTC.b, and multichain lending protocol Radiant.capital, etc.
遭同行联名信「讨伐」
translates to
Being "condemned" by a joint letter from peers
in English.
LayerZero has launched the transfer of Lido Finance's wrapped stETH (wstETH) function on Ethereum, Avalanche, BNB Chain, and Scroll, which has been met with joint resistance from nine cross-chain projects including Connext, Across, Celer Network, ChainSafe, Sygma, LI.FI, Socket, Router Protocol, and Cross-chain Interoperability Alliance.
They expressed concern in their joint letter about LayerZero's recent actions: "LayerZero deployed the proprietary representation of wstETH to Avalanche, BNEChain, and Scroll without the support of Lido DAO. We believe that this action is a direct consequence of the collapse of the interoperability incentive system and can only be fixed through healthy competition at every layer of standardization and bridging stack."
"Exclusive standards locked by suppliers are not standards. Locking them will cause systemic risks. Token issuers should have their own tokens, and open standards encourage healthy competition." In the joint letter, these projects jointly commit to establishing and improving these standards throughout the entire network stack, and invite others to do the same.
Lido has also issued a warning: "At the urging of @LayerZero_Labs, a bridge has been deployed to bring wstETH into Avalanche, BNB, and Scroll. Please note that this bridge is not standardized and has not been audited or endorsed by Lido DAO. If you choose to interact with the bridge, please be extra careful. Proposals to support this bridge by Lido DAO must still go through the necessary checks, discussions, and governance processes."
Community has suffered from LayerZero for a long time
Previously, LayerZero labs completed a $135 million A+ round of financing, with participation from a16z, FTX Ventures, Coinbase, and Binance, among others. It is worth noting that one of the investors is PayPal Ventures, as LayerZero is their first Web3.0 project in their investment portfolio. Such a star project naturally attracts great community attention, and whether to issue coins or not is also the most concerned topic in the community, but LayerZero's attitude towards this has always been ambiguous.
LayerZero code snippet information about ZRO token
The LayerZero community has been suffering for a long time, which was also reflected in the Lido incident. Under the "resistance" and "condemnation" of these cross-chain projects, discussions in the community have also been stirred up.
Community member hal2001 said: "I hardly realized that LayerZero had already been fully deployed, yet it did not receive official voting and approval from Lido. Now on stargate.exchange, if you bridge wstETH from Ethereum to Avax/BNB/Scroll, you are bridging to LZ's proprietary OFT standard. This looks completely official. There is no use of "beta" or "packaging" or "demonstration" language at all.
Ordinary users do not know that they will not receive the official Lido wstETH token. In addition, the security issues here have not been discussed at all. I believe that the message oracle used by LayerZero is Google's oracle, which is completely centralized and not resistant to censorship. Personally, I think it is completely inappropriate to deploy it to production before it is voted or approved by LidoDAO. My view is that LayerZero should remove it before the DAO vote occurs.」
Cryp further pointed out that "Layerzero is really too centralized, in fact, there is almost nothing decentralized. For example, they are related to Google and Conflux. There is currently no information about how tokens will be distributed (but considering the amount of funds raised, it is certain that this will be centralized)."
The team lacks transparency...no blog...their website doesn't showcase their ecosystem...most importantly, the heavy marketing and ambiguous use of airdrops is questionable. I think this is outrageous.
By contrast, the official response from LayerZero seems very formal: "Thank you for the active interaction and strong dialogue of the DAO. We encourage broader discussions on wstETH on L2 within the DAO. We support the DAO's use of the standard bridge on L2 and believe that the best migration method is native bridging. We have made joint decisions with the core team and hope that Lido DAO will manage the BNB and Avalanche contracts. We have been working with the Lido team for a long time, adjusting our strategies based on feedback, and look forward to more technical discussions. We always support the growth of cross-chain LST."
We all know that Stargate is the first protocol built on LayerZero. In this turmoil, Strategy Advisor Hasu stated that although LayerZero's actions are a domineering sales strategy, attempting to force DAOs to accept its proposals.
However, he also believes that LayerZero's solution may be the best solution and should be evaluated: "LayerZero's bridge may be the best, especially for other L1s that cannot achieve trustless bridges. But this is not the way to run the process. We should first publicly review what happened and then run it correctly."
In this cross-chain bridge battle, Chainlink Labs is not absent either. Michael from Chainlink Labs has also expressed his views on this. He believes that cross-chain interoperability is an issue that is extremely sensitive to security. In the past, huge losses have been caused by vulnerabilities and hacker attacks. There should be an objective evaluation standard to choose cross-chain infrastructure, instead of making hasty decisions.
Meanwhile, Michael also recommended Chainlink's solution to the community: "Chainlink's Cross-Chain Interoperability Protocol 5 (CCIP) provides a reliable standard for such evaluations. It leverages the same proven decentralized oracle network (DON) infrastructure that has been a pillar of DeFi for years, using multiple DONs to secure cross-chain interactions, a unique independent risk management network 4 for secondary verification and anomaly detection, and additional security features such as per-token and aggregate rate limits for cross-chain token transfers. CCIP operates at the highest level of cross-chain security 5, providing a deep defense solution that addresses many of the security issues that have plagued other cross-chain protocols in history."
LayerZero's actions have triggered multiple reactions. Although their technology and solutions have been recognized by some experts, how to transparently and fairly deploy and use these solutions is still a point of controversy for the entire community.
As Michael pointed out, cross-chain interoperability is indeed a sensitive issue involving significant assets and user trust. Therefore, decisions should be based on in-depth research and community consensus rather than unilateral action. After all, in the crypto industry, there are still many believers and followers of "complete decentralization," and their voices cannot be ignored.
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