Bitcoin decentralized finance firm Lombard Finance is set to transition from LayerZero technology to Chainlink’s cross-chain interoperability platform (CCIP). This decision follows a comprehensive review of its technology stack in light of the recent Kelp DAO exploit, which resulted in a staggering loss of $292 million.
This strategic pivot comes just a day after cryptocurrency exchange Kraken made a similar shift, opting for Chainlink CCIP to enhance its kBTC wrapped Bitcoin token in place of LayerZero. Lombard emphasized that this decision is primarily driven by its commitment to user safety and security, underscoring its track record of zero security incidents and 100% uptime since its inception.
The transition will affect over $1 billion in Lombard’s Bitcoin-linked assets across multiple blockchain ecosystems, including Solana, Ethereum, and Berachain. Additionally, the firm plans to discontinue the use of LayerZero technology on the Ethereum layer-2 network Morph and its staking protocol, Swell.
According to Lombard, the integration of CCIP not only provides a robust, secure-by-default framework but also allows the implementation of additional security layers. This includes the establishment of a Security Consortium to validate transactions, thereby reinforcing the enforcement of transfer rules across different chains.
Lombard BTC (BTC.B) and Lombard Staked BTC (LBTC) represent over $1 billion in market capitalization, with LBTC alone accounting for $816 million. LBTC serves as a liquid staking token, fully backed by Bitcoin, and enables liquidity for the top cryptocurrency in various DeFi protocols across multiple blockchains.
In addition to migrating to Chainlink’s CCIP, Lombard will also integrate Chainlink’s Cross-Chain Token (CCT) standard, which facilitates the minting and burning of new tokens that are natively compatible across chains.
This move away from LayerZero follows the interoperability firm’s acknowledgment of an internal error that contributed to the Kelp DAO exploit in April. According to a subsequent report, LayerZero admitted to creating unnecessary risks that went overlooked due to poor internal configurations. Notably, its internal RPCs were compromised by hackers linked to North Korea, leading to the substantial loss of assets.
Since the exploit, numerous crypto projects worth billions in total value locked (TVL) have transitioned away from LayerZero technology in favor of Chainlink, including Solv Protocol, Re, and Kelp DAO. The broader implications of these shifts may reaffirm the importance of security and trust in the ever-evolving landscape of decentralized finance.
