LayerZero proposes wstETH availability across Ethereum, Avalanche, BNB and Scroll

LayerZero, a blockchain interoperability firm, proposed that Lido DAO integrate its wrapped stETH (wstETH) token to its Omichain Fungible Token (OFT) standard. If the firm’s proposal is accepted, wstETH would be easily bridged across four networks: Ethereum, Avalanche, BNB and Scroll. 

Lido DAO is yet to vote on the proposal, and community members have raised their concerns regarding the mint-and-burn token standard that poses a risk of an exploit. 

Also read: Lido DAO price could lose its 27% rally as whales sell a third of their 60 million LDO accumulation

Lido DAO could approve wstETH bridging across Ethereum, Avalanche, BNB and Scroll

A proposal to integrate Lido DAO’s wstETH token in LayerZero Lab’s OFT standard has garnered interest from the project’s community. 

If the proposal is put to vote and accepted by the DAO, it would become easier for wstETH holders to bridge the token across four blockchain networks: Ethereum, Avalanche, BNB and Scroll. The boost in cross-chain interoperability makes the token more accessible and is likely to drive its demand in the community. 

Find more about the proposal here.

LayerZero’s proposal is yet to be put to vote and Avalanche, BNB and Scroll have expressed their support for wstETH to be integrated into the OFT standard. Interestingly, Lido’s community members have raised concerns about the mint-and-burn standard and highlighted the risk of exploit, among other issues. 

Potential risks faced by wstETH on acceptance of LayerZero’s proposal

Lido community member, hal2001 commented on LayerZero’s proposal and highlighted his concerns about the OFT standard. According to the member, the standard poses the risk of an exploit of the token, an unauthorized unlimited minting of wstETH. Since the firm proposes directly modifying balances via messages transmitted from the source to the destination chain, if the messaging layer is ever corrupted, there is the possibility of an unlimited mint of wstETH. This could result in a mass selloff and withdrawals on Ethereum, and stETH could depeg.

Staked Ether is critical to the Ethereum community and this requires Lido to select a token standard and a bridging security method appropriately. Hal2001 encourages other members to properly debate the proposal before its adoption.

At the time of writing, LDO price is $1.893 on Binance, with 0.85% gains on the day. Lido Staked Ether (stETH) yielded 1.65% daily gains and 16.02% weekly gains for holders.