Lido DAO chooses Wormhole and Axelar to bridge wstETH on BNB

The decentralized autonomous organization behind the Lido liquid staking protocol has endorsed competing bridges from Wormhole and Axelar for transferring stETH tokens, spurning LayerZero after it launched a bridge without permission last year.

The rival proposal received over 81% of votes in a recent poll, whereas LayerZero’s proposal garnered just 5% support.

Last October, the unauthorized launch of the LayerZero bridge angered members of the Lido community, who felt the move was “disrespectful” and was perceived as an attempt to pressure the protocol into endorsing LayerZero as the official bridge provider. Lido adviser Hasu accused LayerZero of attempting to “lock in” users with its first-mover advantage before the DAO could assess alternatives.

“By unilaterally deploying a bridge and marketing it in an official-seeming way, it feels like you are trying to pressure the DAO into accepting your proposal to avoid liquidity fragmentation and bad UX for users,” Hasu said in a Lido DAO forum.

Lido’s stETH token is a lucrative prize for cross-chain bridge providers looking to facilitate network transfers. With $20.8 billion total value locked, Lido is the largest decentralized finance protocol and a key source of liquidity, according to data from DeFiLlama.

Axelar and Wormhole presented their joint proposal to prevent vendor lock-in and enable extensions to other bridge backends in the future if (and as) desired. 

“Being able to communicate what you feel as a token holder is in the best interest of the protocol. If you take that power away, then you’re chipping away at the fundamentals of decentralization,” said Robinson Burkey, chief commercial officer at Wormhole Foundation.

The Lido community’s emphatic rejection of LayerZero’s bid for official endorsement highlights the intensity of the ongoing conflict between interoperability protocols seeking to become the backbone for cross-chain transactions. As more layer one and layer two networks launch, seamless chain transfers are becoming imperative.

However, bridges also introduce risks, as shown by recent exploits of Wormhole and other bridge protocols. This makes DAOs and developers extremely selective about which solutions they integrate. By acting unilaterally without community consensus, LayerZero appeared to alienate supporters of a DAO that takes decentralization and token-holder engagement seriously.

While LayerZero retains its operational bridge moving stETH between chains, the Lido community has made clear its preferred alternatives going forward. The episode warns other ambitious interoperability plays that decentralized networks expect transparency and consent, not audacious unilateral moves. As solutions like decentralized bridges underpin Web3 development, upholding these ethical principles will be key to long-term acceptance.