Why did LayerZero's "cooperation" announcement make the Lido community and friends angry?

Author | Azuma, Odaily Planet Daily

On October 26, the cross-chain interoperability protocol LayerZero announced on its official X account that it has launched a "full-chain version" (OFT) of the LidoFinance liquid staking derivative token wstETH, allowing the free transfer of the token across Ethereum, Avalanche, BNBChain, and Scroll using LayerZero's communication protocol.

! [Why did LayerZero's "cooperation" announcement make the Lido community and friends angry?] ](https://img-cdn.gateio.im/webp-social/moments-69a80767fe-6f385bdc27-dd1a6f-69ad2a.webp)

After the announcement, Avalanche and BNB Chain followed up on social media to "congratulate". **It looks like a formal collaboration between head protocols, and it seems that Lido wants to expand to more new ecosystems with the help of LayerZero. **

However, as time went on, things began to take a turn in unexpected directions. The first to raise different voices was within the Lido community, with many community members suggesting on social media that LayerZero's deployment had not been recognized by the Lido DAO, and emphasizing that OFT wstETH, which is backed by a third-party protocol (LayerZero), as the "official" version of multiple popular ecosystems with different architectures, is not reasonable in itself. **

! [Why did LayerZero's "cooperation" announcement make the Lido community and friends angry?] ](https://img-cdn.gateio.im/webp-social/moments-69a80767fe-fb0879806d-dd1a6f-69ad2a.webp)

The first level of questioning: the security issue of the OFT model itself

The first layer of questioning focuses on the security of the OFT model itself.

Community member @arixoneth believes that aside from Layer 1s such as Avalanche and BNB Chain, the safest way for Scroll to introduce mainnet assets as a Layer 2 network with zk-rollup architecture should be to use the Rollup native bridge instead of using a third-party bridging protocol. It's not worth sacrificing security for some liquidity.

Community member @hal2001 said that the OFT model uses a "mint/burn" architecture based on authorized smart contracts, which means that there may be some potential vulnerabilities that lead to the unauthorized unlimited minting of wstETH. Considering the importance of wstETH itself to the Ethereum ecosystem, if the model is broken and a large amount of wstETH is mistakenly minted, this can easily trigger a large number of redemptions and sell-offs of ETH itself, thereby destroying the ecological foundation. **

Hart Lambur, founder of Across Protocol, a decentralized interoperability protocol, also posted on the 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 advertise their services as 'decentralized'. Recently, LayerZero once again deployed an unauthorized wstETH bridge using the same centralized Google oracle and marketed it as an 'official' (decentralized) version, much to the upset of many members of the Lido community. LayerZero has a history of high-profile marketing of its products, but is reluctant to discuss the technical details and considerations behind it. It's not good for our industry, and I'm tired of it. ”

! [Why did LayerZero's "cooperation" announcement make the Lido community and friends angry?] ](https://img-cdn.gateio.im/webp-social/moments-69a80767fe-e910171178-dd1a6f-69ad2a.webp)

Based on these views, a large number of community members have raised security concerns about the OFT model, and highlighted that none of the Lido DAO's contributors or external security experts have yet to conduct a thorough security assessment of LayerZero's approach, including architecture analysis, impact assessment of the core protocol, and review of deployment artifacts and governance mechanisms.

The second level of questioning: procedural errors in the advancement of governance

In addition to the design of the solution itself, more questions within the community focused on LayerZero's procedural errors in governance advancement.

**According to the normal governance procedure, the sponsor of the proposal should be fully discussed and approved by the community before proceeding with the deployment, but this time, LayerZero "officially announced" the launch of OFT wstETH immediately after the proposal was launched, and joined forces with Avalanche, BNB Chain and some media to create a high-profile momentum. This operation is suspected of using PR to kidnap community governance. **

Community members @hal2001 believe that LayerZero, Avalanche, and BNB Chain seem to have reached an agreement on the marketing of this event to convince the community that the Lido DAO has officially accepted the OFT standard, but this is not the case, and this is only a preliminary proposal.

Lido's strategic advisor @Hasu called it "speechless", first unilaterally completing the deployment, and then marketing it through official channels, which felt like forcing the Lido DAO to accept the proposal. Even if LayerZero's solution is not problematic on its own, it needs to be fully discussed within the community and allowed for the community to sift through multiple options. There was a mistake in the order in which this matter was advanced.

! [Why did LayerZero's "cooperation" announcement make the Lido community and friends angry?] ](https://img-cdn.gateio.im/webp-social/moments-69a80767fe-48d17fce48-dd1a6f-69ad2a.webp)

Community member @Scaloneta also "erupted" angrily, ** officially announcing something that was not even voted on, as if it had become a reality, which is disrespectful to the Lido DAO and shows that LayerZero itself is not serious enough. **

The collective counterattack of friendly businessmen

While the Lido community collectively bombarded LayerZero, the major cross-chain protocols were not idle, and they naturally would not sit idly by watching LayerZero grab market share in such an "unethical" manner.

In addition to the aforementioned Across Protocol founder Hart Lambur, Georgios Vlachos, co-founder of AxelarNetwork, who proposed a competing proposal from Axelar Network under the LayerZero proposal thread, which has been supported by some community members.

! [Why did LayerZero's "cooperation" announcement make the Lido community and friends angry?] ](https://img-cdn.gateio.im/webp-social/moments-69a80767fe-7b3bc42a80-dd1a6f-69ad2a.webp)

Subsequently, Michael Robinson, Product Marketing Manager at ChainlinkLabs, also proposed a competing solution based on the cross-chain interoperability protocol CCIP.

In the early hours of this morning, eight major projects, including ConnextNetwork, ChainSafe, Sygma, Li.Fi, Socket, Across Protocol, Celer, and Router, jointly issued a document angrily slamming LayerZero for "not talking about martial arts" and calling for the construction of an open cross-chain bridging standard. **

! [Why did LayerZero's "cooperation" announcement make the Lido community and friends angry?] ](https://img-cdn.gateio.im/webp-social/moments-69a80767fe-427a9d9408-dd1a6f-69ad2a.webp)

Resilience of decentralization

All in all, LayerZero was self-defeating, and ultimately sparked a collective outrage from the Lido community and industry friends.

As of this post, LayerZero's latest reply 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; The second is the willingness to hand over ownership of the Avalanche and BNB Chain bridge contracts to the Lido DAO, allowing the DAO to control the configuration.

Looking back at the whole incident, although LayerZero's behavior is indeed enough to "catch the horse", we are even more impressed by the performance of Lido DAO in this incident. Although LayerZero mentioned in its latest reply that it has been discussing the solution with the Lido core team in recent months, it can be seen that the community does not care if you have a "holy decree" or not, and more community members are still focusing on the solution and the program itself.

Perhaps, this is where the resilience of decentralization lies.