LayerZero's Bridged Token Creates 9-Way Clash Over Ethereum's Future – TronWeekly

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Cross-chain protocol LayerZero recently introduced a new bridged token, sparking controversy within the Ethereum ecosystem. Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer, and Router jointly criticized this token in a statement released on October 27. They referred to the token’s standard as a “vendor-locked proprietary standard” that restricts the freedom of token issuers.
The protocols argued that LayerZero’s new token, designed to bridge wstETH to Avalanche, BNB Chain, and Scroll, lacked support from the Lido DAO, a decentralized autonomous organization. They raised concerns about the token being governed by “provider-specific systems” primarily controlled by the implementing bridges, thereby posing potential “systemic risks” that are difficult to quantify. As a solution, they advocated for the use of the xERC-20 token standard to bridge stETH instead of the cross-chain protocol’s offering.
Lido Staked Ether (stETH) is a liquid staking derivative generated when users deposit Ether into the Lido protocol for staking. LayerZero launched a bridged version of stETH, known as Wrapped Staked Ether (wstETH), on BNB Chain, Avalanche, and Scroll on October 25, expanding its availability to these networks without the approval of the Lido DAO. This move drew criticism from Lido DAO members who accused the cross-chain protocol of attempting to mislead users about the DAO’s support for the new token.
Simultaneously, the cross-chain protocol proposed that the Lido DAO should officially endorse the new token for use on the three networks, offering to relinquish control of the token’s protocol. However, some Lido DAO members perceived this as an attempt to pressure the DAO into approving the proposal prematurely.
Concerns over security also surfaced, with claims that the cross-chain protocol’s centralized approach could pose a significant risk to Ethereum’s main protocol. A potential hack in the verification layer might result in the infinite minting of wstETH, according to Lido DAO member Scaloneta.
In response, LayerZero defended its wstETH token’s security and decentralization. They emphasized the omnichain fungible-token (OFT) standard’s reliability, which has been used by over 75 projects, transferring over $3 billion in value. LayerZero asserted that developers maintain the ability to choose their validation layer and include other bridges within the immutable LayerZero framework.
LayerZero’s bridged token has stirred controversy within the Ethereum community, with concerns surrounding its governance and security. As the debate continues, it remains to be seen whether LayerZero’s proposal will gain approval from the Lido DAO and the broader Ethereum ecosystem.
Filed Under: News, Altcoin News, Blockchain, World
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