Lombard Finance Dumps LayerZero, Will Use Chainlink to Power $1 Billion in Bitcoin Assets

Bitcoin decentralized finance (DeFi) company Lombard Finance will replace LayerZero technology with Chainlink’s cross-chain interoperability platform (CCIP), following an extensive review of its Bitcoin asset technology in the wake of last month’s stock exchange. Kelp DAO exploit worth $292 million.

The move comes a day later crypto exchange Kraken similarly opted for Chainlink CCIP to power its kBTC-wrapped Bitcoin token, instead of LayerZero.

“This decision prioritizes the safety and security of all Lombard users and reflects our commitment to maintaining the security record we have built since day one, zero security incidents and 100% uptime,” Lombard posted on X.

The move will impact more than $1 billion of Lombard’s Bitcoin-linked assets Solana, EthereumAnd Berachain. The company will also stop using LayerZero technology on Ethereum layer-2 network Morphing and staking protocol Swell.

“With CCIP, we benefit not only from the secure-by-default foundation, but also from the ability to configure additional layers of security on top of that,” the company said.

“This includes our Security Consortium validating transactions as an additional attestation,” it added, noting that this allows the company to enforce its own transfer rules across all chains.

Lombard BTC (BTC.B) and Lombard Staked BTC (LBTC) together represent over $1 billion in market capitalization, of which $816 million belongs to the Bitcoin asset, LBTC. That token acts as a liquid staking token and is backed 1:1 by Bitcoin, unlocking the best crypto asset for use in DeFi protocols on multiple blockchains.

In addition to the migration to Chainlink’s CCIP, the company is also adopting Chainlink’s Cross-Chain Token (CCT) standard for minting and burning new tokens that are natively cross-chain compatible.

The company’s decision to leave LayerZero comes after the interoperability company admitted as much “made a mistake” regarding April’s Kelp DAO exploit. In a post-mortem report, the company said its internal configurations created an unnecessary risk that it “simply didn’t see.” The company’s internal RPCs were ‘poisoned’ by North Korean hackers, leading to the loss of $292 million in assets from the Kelp DAO infrastructure.

Since that time, multiple crypto projects representing billions of dollars in Total Value Locked (TVL) have moved away from LayerZero technology in favor of Chainlink, including assets of Solv protocolRe and Kelp DAO.