wstETH on Avalanche and BNB and Ownership Acceptance by Lido DAO

Proposals
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Thank you to the DAO for the thoughtful engagement here. We are happy to see the robust dialogue and encourage dedication of ample time and resources to broader discussion within the DAO around wstETH on L2s.

We respect and acknowledge the DAO’s immediate desire to use canonical bridges for L2s. Further, we strongly agree with the DAO that if the protocol or users are indifferent to the benefits of horizontal composability then the best way to move assets onto L2s is through native bridges.

When we constructed the initiative to deploy wstETH with horizontal composability, each network was included only upon the explicit desire and opt-in of their respective core teams. Based on the current feedback, we recognize the preferences of the DAO regarding native bridges and L2s and have, in coordination with Scroll, requested that the Stargate Foundation removes the bridging of wstETH into Scroll.

Per the original forum post above, we request that the Lido DAO claim ownership of the contracts on BNB and Avalanche; the Lido DAO has entire control over the native token once ownership is accepted, including minting limits and additional security configurations. Once accepted, LayerZero Labs maintains no ability to mint or burn tokens, by design. The implementation follows the specifications which were utilized in the expansion of wstETH to Neutron, as advised by the Lido core team.

We have been engaging with the Lido Core team, community members, and independent security teams for several months now on this specific permissionless deployment and made adjustments to the approach based on their feedback. We hope there is further engagement by Lido contributors to discuss the technical specification further and to cover any concerns or inaccuracies present in the forum. As always, we are eager to support the growth of cross-chain LSTs at-large in alignment with protocol builders.

Note: The original post has been updated to reflect the changes made based on robust engagement with the DAO.

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Hey, I’d like to share my thoughts about Layerzero.

Layerzero is really too centralized, in fact there’s hardly anything decentralized at the moment. For example, they’re linked to Google and Conflux (linked to China Telecom and the Chinese government). There’s still no information on how the tokens will be distributed (but given the amount of funds raised, it’s safe to assume that this will certainly be centralized).

There’s no transparency about what the team is doing… No blog… Their website doesn’t show their eco system…

And above all, a lot of marketing and playing on the ambiguity of airdrop.

I find this outrageous and wanted to share my thoughts with the lido community. While many make efforts to decentralize, others lie to their community and centralize.

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On top of all of the unethical behavior already called out, the Curve team has now addressed it publicly that L0 is also blatantly lying about CRV and crvUSD being part of this “Outrageously Fraudulent Token” sham

twitter(.)com/fiddyresearch/status/1717661828564570465

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This is an appropriate move regarding Scroll. However, it seems reasonable and necessary that you do the same with Avalanche and BNB. Right now—live and in production!—stargate.exchange is bridging wstETH from Ethereum to AVAX/BNB using your unapproved and unofficial OFT bridge, but displaying this like it’s official and approved by Lido. This should not happen without DAO approval.

I believe you should immediately remove AVAX/BNB wstETH bridging from the stargate frontend to minimize further user confusion.

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26

Hi everyone, I’m Georgios Vlachos, representing Axelar Foundation.

  • Axelar network is a cross-chain messaging platform sanctioned to bring wstETH to Cosmos, the first L1 ecosystem where Lido has officially expanded. You may find the relevant discussion in the forum, under the conversation titled: “Lido on Cosmos: Initial Deployment”.
  • Axelar network is the only decentralized solution on the market, with a tech stack and security model that adhere to high standards. Axelar network’s security has been assessed by top DeFi teams, including the recent Uniswap Foundation report which is pubicly available.
  • Axelar Foundation, Lido DAO, KyberSwap and Squid launched an initiative for wstETH->wstETH transfers across L2s. You may try it on Squid Router’s website, under v2.

Cosmos wstETH deployment uses Axelar network
For Cosmos, Neutron instantiated a multi-bridge contract for wstETH, with Axelar network as the first participant. The multi-bridge was implemented at Lido DAO’s instruction, in order to maintain the ability to add further participants (like Wormhole) later. Axelar Foundation received this approval following a multi-month discussion with Lido DAO stakeholders. It’s worth noting that Axelar network assets (including wstETH) had already been widely adopted within Cosmos, after last year’s governance vote by the Osmosis community. In furtherance of the initiative’s best interests, steps were taken to support the adoption of wstETH and wstETH-based DeFi across the larger Cosmos ecosystem, specifically through adoption of Neutron’s implementation, rather than the existing Axelar network version of wstETH (such steps included the allocation of 2m AXL tokens total to Osmosis and Injective).

Axelar network has a track record of delivering best-in-class security
The hard part of interoperability is building a robust messaging network. As of today, Axelar network is the most decentralized (75 validators), followed by Wormhole (19 validators). Recent independent reports concluded that only Axelar network and Wormhole provide reasonable decentralization, with transparent and open-source codebases. LayerZero is a centralized implementation, with an opaque codebase. As an example, you may review the Uniswap Foundation report.

I’d also like to address one of LayerZero’s key selling points, as presented in the OP, namely the ability to customize security. The claim is that LayerZero offers the best approach, because it can give mint/burn privileges to multiple messaging protocols. However, this is not a differentiator, as this functionality is simple to implement. Neutron team built it for the Cosmos instantiation of wstETH, as have many other teams in the past. There is also a roadmap for adding new validation methods to Axelar network, including ZK-based state proofs, as those become available.

Axelar Foundation’s recommendation for BNB, Avalanche and L2s

  • For L2 ecosystems use the native bridges, as articulated by @jakov and others.
  • For L1 ecosystems (starting with BNB and Avalanche), replicate the precedent set within the Cosmos ecosystem, through a multi-bridge approach with Axelar network’s battle-tested approach as the first participant. The multi-bridge contract should remain as close as possible to the specifications of the Cosmos contract. Over time, messaging networks that meet certain quality criteria should be added to the multi-bridge contract.

Axelar Foundation is open to participating in a RFP (Request for Proposal) process, as recommended by earlier posts, if the Lido DAO decides to go down that path. Axelar Foundation will be following up with a formal proposal.

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Hello Lido Community,

I’m Kydo from the Uniswap community.

I’d like to share the Uniswap Bridge Assessment Report with you. This report distills Uniswap’s learning from the turbulent bridge battle, a contentious debate that generated over 200 comments and 50 thousand words on our forum.

This 50+ page report details the assessment methodology and the analysis of 6 bridges.

While this report may not perfectly apply to Lido’s current situation, and it may not include the latest information on these bridges, I believe it offers a helpful starting point for developing a framework to analyze the security properties of these interoperability protocols.

I am starting to feel this discussion thread is descending into the Uniswap bridge situation. As a Uniswap delegate who went through that, I do not wish that for Lido.

I hope Lido community leaders (ccing a few here @Hasu @sacha @ujenjt ) can start these technical conversations early and steer the discussion to more productive territories.

Background info:

  1. Orignial heated discussion around Uniswap bridging: https://gov.uniswap.org/t/rfc-update-deploy-uniswap-v3-1-0-3-0-05-0-01-on-bnb-chain-binance/19734
  2. Uniswap bridge committee members and their background (included in the report):
    image
    image2968×1204 366 KB
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we need only the Binance native version of wstETH. a centralised token standard is unnecessary and unwelcome, particularly from a centralised closed-source 2-of-2 multisig.

This team appears to scoff at the core principles of why we are here in the first place, to create open-source, decentralized, and permissionless technology for the world.

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The fact that their code base on their oracle and relayer is not open source is a major red flag and should automatically strike them out. Also by using them you’re essentially ‘giving the keys’ to Lido to Google Cloud who runs their oracle. This isn’t Web2 or traditional tech, and this isn’t 2017-2918. Centralized oracle’s are a point of failure

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I support the Axelar Foundation’s proposal for BNB, Avalanche and L2. Axelar is by far the most decentralized and secure network today. They’re totally transparent about what they’re doing, and it’s open source, unlike Layerzero. It’s a team who do everything they can to make it as easy to use (one-click) and as decentralized as possible. When they say something, they do it, not misleading marketing.

Layerzero, which uses Google Cloud’s oracle by default, is a big step backwards in terms of decentralization and security.

That’s why I recommend the Axelar foundation.

2 Likes
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As an observer, it’s been really great to see the discussion that this sparked. We’ve been talking about these types of issues coming up on our team since we’ve started working on Hyperlane, and solutions for these problems are what motivated us to build Hyperlane’s Modular Security stack.

With Hyperlane, the Lido DAO can deploy wstETH tokens on any chain while it remains the sole owner of those tokens. In terms of security, we’ve designed and shipped an option, the Aggregation module, that can enhance the resilience of a system by integrating and aggregating multiple providers (at the discretion of the deployer). In fact with Hyperlane v3 (launching imminently :eyes:), we tackle this issue head on and make it easier than ever to integrate any application. You can read more about these in two short posts in our blog (unfortunately, I can’t post the links here but you can find the blog through the Hyperlane website hyperlane.xyz): the first, explaining how you can use Hyperlane to assemble your ‘Security Legos’, and another explaining Hyperlane Hooks, to make this more accessible to developers than ever before. This approach would allow the DAO to use the native bridge for rollups, and use a quorum of bridge providers for other cases, all the while utilizing the same interface and tokens.

Hyperlane was built to allow token issues to have maximum flexibility, without losing their sovereignty, in their pursuit of interchain expansion. Choice of interoperability provider should not result in an organization losing control and ownership of its destiny.

Given the interest sparked by these discussions, the core contributors at Hyperlane may proceed with a more formal proposal to the DAO about incorporating the design mentioned here.

TL;DR

  • Hyperlane was built with a modular security stack to promote the customization of security and reduce dependency on single points of failure.
  • Hyperlane’s Aggregation ISM is live, and can allow the Lido DAO to easily integrate multiple bridges, and use those as to handle the interchain transfers of wstETH
  • A more formal proposal may follow to suggest how these ideas can be implemented within the Lido DAO to promote its interchain expansion, without a loss of sovereignty for the DAO.
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Hi all, Michael from Chainlink Labs here.

We’re happy to see such thoughtful discussion in the Lido community on how the protocol can expand cross-chain and broaden access to wstETH to new chain environments. Given that cross-chain interoperability is an extremely security-sensitive dynamic (with billions lost over the past few years due to hacks/exploits), and the fact that Lido’s Liquid Staked Ether secures an immense amount of value ($15B+), the selection of any cross-chain infrastructure should not be done hastily without considering the options available.

We’re fully aligned with @Hasu’s comment regarding having formal objective evaluation criteria and process for selecting the cross-chain infrastructure solution for Lido, and we’re glad to see that the Network Expansion Workgroup (NEW) has provided initial guidelines to initiate this process.

We believe that Chainlink’s Cross-Chain Interoperability Protocol (CCIP) offers a robust standard for such evaluation. It utilizes the same battle-tested Decentralized Oracle Network (DON) infrastructure that have been the backbone of DeFi for years, with multiple DONs used to secure cross-chain interactions, a unique independent Risk Management Network for secondary validation and anomaly detection, and additional security features like per-token and aggregate rate limiting on cross-chain token transfers. CCIP operates at the highest level of cross-chain security, providing a defense-in-depth solution resolving many of the security issues seen with other cross-chain protocols historically.

Many node operators securing Chainlink CCIP already run Lido validators, minimizing additional trust assumptions. CCIP also provides protocols, such as Lido, full ownership and control over their token contracts on the destination chains and does not impose vendor lock-ins via the implementation structures.

CCIP has been built not only to create an interoperable public blockchain ecosystem, but also to connect private bank blockchains to any other public or blockchain network, creating a global internet of contracts that can bridge the crypto world and DeFi leaders like Lido to the rising wave of institutions adopting blockchains. We have worked with some of the largest financial institutions and market infrastructures in the world, including Swift (interbank messaging standard for 11,000+ global banks), DTCC (settles $2+ quadrillion in securities volume annually), and ANZ ($1T+ assets under management), on how CCIP can securely facilitate the cross-chain settlement of tokenized assets across public/private chains.

We’ll share more specifics for the current review process outlined by the NEW, where we will post our full proposals for Avalanche and BNB Chain based on the community’s desired timelines, deliverables, and other requirements to meet the needs for cross-chain wstETH, which will also inform future CCIP proposals to other blockchain ecosystems.

We’re excited to collaborate with the Lido community, including the recently formed Network Expansion Workgroup, to help Lido achieve its cross-chain goals.

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33

Using IBC as an alternative erases the need for reliance on third-party intermediaries, prioritizing decentralization and security, which is particularly crucial for assets such as $stETH that serve as foundational elements for security within their native chains.

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GM, as a simple user , may i voice my opinion here we are a bit rekt here now ? you (l0) open a bridge from scroll to avax and bnb ,in a huge marketing push , people do as they are told and try it out and and are now stuck on bnb and avax without any way to swap it back since there is no liquidity and you closed the bridge back . furthermore you leave the bridge into the liquidity hole open for even more users to get rekt ? then you advise the only solution to bridge to ethereum , swap there and bridge back to scroll … cost atleast 30 dollar which is a daily wage in my country … dont forget us

2 Likes