Following the KelpDAO-related rsETH crisis, infrastructure preferences in the DeFi ecosystem are starting to reshape, with reports indicating that some major protocols, with a combined value of around $2 billion in total value locked (TVL), are moving away from the LayerZero infrastructure and switching to the Chainlink CCIP system.
According to an assessment shared by crypto analyst Tom Wan, projects involved in this transition process include KelpDAO (approximately $1.5 billion TVL), Solv Protocol ($600 million TVL), and re ($200 million TVL).
However, it was noted that major assets such as Ethereum’s USDe product, EtherFi’s weETH assets, and BitGo’s WBTC still use LayerZero’s OFT standard.
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This wave of migration comes shortly after LayerZero apologized for a recent security breach. The company acknowledged shortcomings in communications during the crisis and stated that its internal RPC infrastructure was targeted by the Lazarus Group. The team also admitted that a “1/1 DVN” configuration error created a critical “single point of failure.”
As you may recall, the security breach of KelpDAO’s rsETH bridge exposed hundreds of millions of dollars in risk for many DeFi protocols, including Aave, leading to liquidity crises and discussions of “bad debt.”
*This is not investment advice.