A New Bridged Token Draws Criticism from Ethereum Protocols
A new bridged token introduced by LayerZero, a cross-chain protocol, has faced backlash from nine protocols within the Ethereum ecosystem. In a joint statement, Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer, and Router criticized the token’s standard for being a “vendor-locked proprietary standard.” They argued that it restricts token issuers’ freedom and poses systemic risks that are difficult to quantify. The protocols advocated for the use of the xERC-20 token standard instead.
LayerZero Launches Wrapped Staked Ether (wstETH)
LayerZero recently launched a bridged version of Lido Staked Ether (stETH) called “Wrapped Staked Ether (wstETH)” on BNB Chain, Avalanche, and Scroll. Prior to this launch, stETH was not available on these networks. Since any protocol can create a bridged version of a token, LayerZero did not require approval from Lido’s governing body, LidoDAO. However, some members of LidoDAO accused LayerZero of attempting to mislead users into thinking that the new token had support from the DAO.
Proposed Approval by LidoDAO Sparks Controversy
On the same day as the wstETH launch, LayerZero proposed that LidoDAO should approve the new token as the official version of stETH on the three networks. They offered to transfer control of the token’s protocol to LidoDAO. However, some LidoDAO members believed this was an attempt to pressure them into accepting the proposal. There were also concerns about security issues associated with LayerZero’s centralized approach.
Hot Take: Controversy Surrounding LayerZero’s Bridged Token
The introduction of LayerZero’s bridged token has sparked controversy within the Ethereum ecosystem. Nine protocols have criticized the token’s proprietary standard, claiming that it limits the freedom of token issuers and poses systemic risks. The protocols advocate for the use of an alternative token standard. Additionally, concerns have been raised about LayerZero’s launch of the bridged token without approval from LidoDAO, leading to accusations of misleading marketing efforts. The proposed approval by LidoDAO has also faced controversy, with some members perceiving it as an attempt to manipulate decision-making. Security issues associated with LayerZero’s centralized approach have further fueled the debate.
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