LayerZero to axe 14 low-activity chains after KelpDAO exploit – Details
Cross-chain interoperability supplier LayerZero will withdraw off-chain assist for 14 low-activity chains, together with Arbitrum Nova.
In its newest assertion, the agency stated that its DVN (decentralized verifier community) and Executors, collectively answerable for off-chain communication between completely different chains, might be deprecated for the 14 chains.
The affected networks embody Cronos zkEVM, Degen, Skale Europa, Superposition, Shrapnel, and extra. Because of this, some belongings, together with stablecoins (USDT and USDC) throughout these chains, might be stranded if not moved earlier than the complete shutdown.
In keeping with LayerZero, the off-chain assist might be axed in 30 days (by September).
Since July, LayerZero has flagged over 30 chains with low exercise, together with the just lately shut BounceBit. Though the transfer is positioned as operational effectivity, safety danger and competitors appear to be key causes behind the aggressive shift.
Chainlink CCIP traction threatens LayerZero
LayerZero has large monetary backing, together with top-tier VC companies resembling Sequoia Capital, a16z (Andreessen Horowitz), Binance Labs, and Coinbase Ventures.
And the wager was easy: bridge the fragmented liquidity throughout varied blockchains. However the KelpDAO’s $292M hack, one of many largest DeFi exploits in 2026, triggered an enormous fallout.
The exploit stemmed from LayerZero’s really useful “1-of-1” DVN setup, which doesn’t give sufficient verification earlier than giant minting or fund transfers are permitted. Because the similar loophole can be utilized with low-adopted reserve belongings, Aave has stopped supporting most of them, together with ghost chains.
In truth, a number of tasks have since migrated from LayerZero to rival Chainlink CCIP (Cross-Chain Interoperability Protocol). Notably, the Wyoming state authorities, BitGo (WBTC), and Nethermind have migrated from LayerZero to CCIP.
Chainlink’s Zach Rynes estimated {that a} whole of $15B has been migrated from LayerZero, underscoring the costly lesson for LayerZero for the KelpDAO fallout.
Notably, after the exploit, LayerZero bridged quantity dropped 4x from practically 400K $ETH to about 100K $ETH.
As such, LayerZero’s aggressive transfer to wind down assist for over 30 chains could also be considered as a strategic play to scale back its safety danger publicity. By extension, it’s meant to counter Chainlink CCIP’s rising competitors after the KelpDAO exploit.
However whether or not that’s sufficient to cease its high tasks from migrating to Chainlink stays to be seen.
Remaining Abstract
- LayerZero to withdraw assist for 14 chains by September.
- Chainlink CCIP has attracted over $15B in belongings migrating from LayerZero because the KelpDAO hack.
