Recently, there was a lot of excitement around a new bridge token, but LayerZero’s wstETH (Wrapped Staked Ether) received mixed reactions from the crypto community.
On October 26th, LayerZero officially launched the bridge version of stETH, called Wrapped Staked Ether (wstETH), on BNB Chain, Avalanche, and Scroll. Prior to this, stETH wasn’t available on these three networks.
LayerZero stated that expanding access to stETH through wstETH on these chains would allow their respective DeFi ecosystems to grow while supporting Lido’s chain expansion ambitions.
However, shortly after the launch, Lido DAO issued a warning, cautioning users about wstETH, stating that it lacks standardization and hasn’t been audited or verified by Lido DAO.
By October 27th, nine Ethereum ecosystem protocols, including Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer, and Router, collectively criticized LayerZero’s new bridge token wstETH. These protocols believed that wstETH was exclusive and limited the freedom of token issuers, potentially leading to misuse.
WstETH is issued as an omnichain fungible token (OFT). OFT is the common term for tokens from projects utilizing LayerZero’s omnichain infrastructure.
The protocols expressed support for using the xERC-20 token standard to bridge stETH instead of using LayerZero’s new token.
WstETH also received mixed reviews from the community. Some were concerned about potential security issues, while others expressed dissatisfaction with Scroll being included in the networks supporting wstETH.
In response, LayerZero removed Scroll from the networks supporting wstETH and asserted that the wstETH protocol is safe and decentralized.
LayerZero is a protocol providing cross-chain infrastructure for various decentralized applications (Dapps) on blockchains that can interact with multiple chains (Omnichain).
In April, LayerZero successfully raised over $120 million and plans to further develop cross-chain functionality within the Web3 ecosystem and collaborate with Radix to bring cross-chain functionality to the Radix Babylon network.