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Critics Slam LayerZero's wstETH Token, Accusing it of Being 'Proprietary'

Critics Slam LayerZero’s wstETH Token, Accusing it of Being ‘Proprietary’

In a scathing joint statement, Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer, and Router have come together to criticize LayerZero’s new token. They argue that the token’s standard is a “vendor-locked proprietary standard” that restricts the freedom of token issuers. The protocols advocate for the use of the xERC-20 token standard instead.

LayerZero recently launched a bridged version of Lido Staked Ether (stETH) called Wrapped Staked Ether (wstETH) on BNB Chain, Avalanche, and Scroll without the approval of Lido DAO. This move has raised concerns among the protocols, who claim that it creates systemic risks and poses security issues.

Members of the Lido DAO have accused LayerZero of attempting to mislead users into believing that the new token has support from the DAO. LayerZero has proposed that the Lido DAO approve wstETH as the official version of stETH on the three networks, but some DAO members see this as an attempt to pressure them into passing the proposal.

The protocols argue that LayerZero’s centralized approach puts Ethereum’s main protocol at risk and could lead to catastrophic consequences. They call for the use of open and decentralized standards for bridging tokens.

LayerZero has defended its token’s protocol, stating that it is secure and decentralized. They claim that their omnichain fungible-token (OFT) standard is widely used and has facilitated over $3 billion in value transfers.

In summary:

– Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer, and Router criticize LayerZero’s new token.

– They argue that it restricts the freedom of token issuers and advocate for the use of open standards.

– LayerZero launched wstETH without Lido DAO’s approval, leading to accusations of misleading marketing.

– Some Lido DAO members see LayerZero’s proposal as an attempt to pressure them into accepting the new token.

– The protocols raise concerns about the centralized nature of LayerZero’s approach and potential security risks.

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