Solv Protocol decided to transfer its tokenized Bitcoin portfolio, worth a total of $ 700 million, from the LayerZero platform and transfer it to Chainlink’s Cross-Chain Interoperability Protocol (CCIP) infrastructure. This move stands out as the second major protocol to leave LayerZero after the recent KelpDAO attack. Solv Protocol stands out as a platform that operates on multiple blockchains in the decentralized finance (DeFi) ecosystem and offers asset management and tokenization services.
LayerZero departure wave grows
Solv Protocol’s decision comes just two days after KelpDAO began migrating its bridge system from LayerZero to Chainlink CCIP. KelpDAO held LayerZero’s permission to configure the bridge responsible for the attack that occurred last month and caused nearly $292 million in damage. The company shared screenshots of the correspondence with the LayerZero team and argued that there were no clear objections to the design.
Bryan Pellegrino, founder of LayerZero, stated that these accusations do not reflect the truth; However, after what happened, the protocols could not be prevented from leaving the platform.
Protocol migration and its reasons
According to KelpDAO’s post, using a “1/1 validator” (transfers approved by a single validator signature) in the bridge system presented a riskier structure compared to multiple validators and posed a risk of attack. After this model remained in practice, this structure was completely removed by the platform; Protocols began to be transitioned to new security standards. According to DefiLlama data, Solv Protocol currently manages over $611 million in total value locked across Bitcoin, Ethereum, and other chains.
Solv announced that it will stop supporting LayerZero bridges and make CCIP the common standard across all networks. Will Wang, the company’s director of technology, said in the announcement:
“Security is the foundation of everything we build at Solv, and our move to Chainlink CCIP reflects this commitment at the highest level.”
he stated.
Johann Eid, business development director of Chainlink Labs, stated that this move by Solv is an indication that the leading protocols in the DeFi industry are turning to Chainlink to meet the high security needs.
Technical advantages and market impact of CCIP
In Chainlink’s CCIP architecture, three independent oracle networks operate for each transit line. Thanks to this structure, even if one authentication path is compromised, attackers cannot access the others. In addition, since the risk management network was prepared with a completely different team and language, the security layer has been increased.
It has been reported that no cases of depreciation have been recorded since the launch of CCIP. On the other hand, after the big loss in LayerZero, there was a decrease of $ 13 billion in the total locked value of important platforms such as Aave, resulting in a bad debt gap of $ 177 million.
In order to provide compensation to users affected by the attack, LayerZero pledged 10 thousand ETH to the DeFi United recovery fund. While Arbitrum’s Security Council has frozen 30,766 ETH in attacker wallets, uncertainty remains over the legal status of these assets due to US-based legal claims. On the other hand, Aave initiated a legal process to release the funds.
Following KelpDAO’s accusations, LayerZero’s reputation in the industry was further damaged, while the successive separation of two important high-volume protocols created a risky situation for the future of the platform.
According to DefiLlama data, LayerZero generated $197,000 in fee revenue in the last 30 days. The platform’s own token is currently traded at $ 1.48 and has decreased by 1.6 percent in the last 24 hours.
