Blockchain
protocols
frequently
pride
themselves
on
their
“permissionlessness”
–
the
idea
that
anyone,
anywhere
can
build
on
top
of
a
protocol
without
asking
for
explicit
approval.
But
in
practice,
it
is
sometimes
wiser
to
ask
for
permission.
Last
October,
LayerZero,
the
market-leading
firm
that
builds
interoperability
infrastructure
for
blockchains,
set
up
a
crypto
bridge
allowing
users
to
move
Lido’s
popular
staked
ETH
(stETH)
token
to
other
networks,
including
Binance’s
BNB
chain
and
the
Avalanche
blockchain.
LayerZero
had
asked
Lido
DAO
–
the
community
that
governs
the
protocol
–
for
its
endorsement,
but
it
deployed
the
bridge
before
waiting
for
the
group’s
official
go-ahead.
There
wasn’t
anything
technically
impermissible
about
that,
and
it
wasn’t
even
entirely
unprecedented
–
Lido
has
used
various
bridges
in
the
past,
and
not
all
of
them
waited
to
launch
until
after
a
community
vote.
But
LayerZero’s
marketing
was
particularly
triggering
some
members
of
the
Lido
DAO
community
–
critics
thought
LayerZero
had
tried
to
pass
itself
off
as
an
official
Lido
partner
without
the
DAO’s
sign-off.
“Announcing
something
that
wasn’t
even
voted
on
as
if
it
was
already
a
reality
is
disrespectful
to
the
DAO,
and
a
clear
gesture
of
unseriousness,”
one
member
posted
in
the
Lido
DAO
governance
forum
at
the
time.
A
letter
signed
by
a
consortium
of
crypto
infrastructure
providers
at
the
time
suggested
that
LayerZero
appeared
to
be
inappropriately
seizing
the
first-mover
advantage
as
a
way
to
“lock
in”
users
ahead
of
competitors.
“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,
a
Lido
strategic
advisor,
said
in
the
Lido
DAO
forums.
“Driving
users
to
it
through
marketing
makes
accepting
an
alternate
bridge
proposal
more
painful.
These
actions
put
the
DAO,
Lido
stakers,
and
participating
chains
in
a
difficult
position.”
The
reason
this
is
all
such
a
big
deal
–
and
so
controversial
–
is
that
as
more
blockchains
proliferate,
cross-chain
“interoperability”
is
becoming
paramount.
There’s
an
intense
turf
battle
underway
between
bridge
protocols,
the
key
infrastructure
needed
to
make
cross-chain
interoperability
work.
But
these
services
are
also
problem-prone,
which
is
why
protocols
can
be
precious
about
where
they
dole
out
their
endorsements.
Lido’s
stETH
endorsement
is
seen
as
a
big
prize
for
interoperability
providers,
because
Lido
is
the
biggest
decentralized
finance
(DeFi)
protocol
of
all,
with
a
total
value
locked
or
TVL
of
$20.8
billion,
according
to
DeFi
Llama.
This
week,
Lido
DAO
members
made
their
displeasure
with
LayerZero
known
in
a
temperature-check
poll:
81%
of
votes
went
in
favor
of
a
rival
bridge
proposal
from
two
of
LayerZero’s
biggest
competitors,
Axelar
and
Wormhole.
Pending
a
formal
vote
ratifying
the
Axelar-Wormhole
proposal,
the
bridge
will
soon
become
Lido’s
“official”
provider
for
moving
stETH
tokens
to
BNB
Chain.
“Axelar
and
the
Wormhole
teams
decided
to
collaborate
and
put
a
joint
proposal
together,
where
effectively
the
security
of
both
of
the
networks
gets
combined
together
to
achieve
strong
security
properties
for
moving
staked
ETH
from
one
chain
to
the
other,”
Sergey
Gorbunov,
CEO
of
Interop
Labs,
the
initial
developer
of
Axelar,
told
CoinDesk
in
an
interview.
LayerZero
Labs
CEO
Bryan
Pellegrino
did
not
respond
to
CoinDesk’s
request
for
comment.
LayerZero
was
clearly
in
its
competitors’
crosshairs
as
they
put
together
their
proposal.
Gorbunov
told
CoinDesk
the
Axelar-Wormhole
proposal
was
specifically
aimed
at
preventing
“vendor
lock-in”
–
whereby
service
providers
use
their
first-mover
advantage
to
permanently
cement
themselves
into
a
protocol’s
infrastructure.
The
Axelar-Wormhole
bridge
“can
be
extended
potentially
to
support
other
bridge
providers
on
the
back-end
if
the
Lido
Foundation
chooses,”
Gorbunov
explained.
LayerZero’s
competing
proposal
for
the
official
endorsement
received
a
measly
5%
of
the
tally
in
this
week’s
temperature-check
poll.
“This
is
a
bigger
deal,
in
my
opinion,
than
a
normal
kind
governance
vote,”
Robinson
Burkey,
the
Wormhole
Foundation’s
chief
commercial
officer,
told
CoinDesk.
“It
became
more
about
principle
than
the
actual
technology
here.”
“Being
able
to
communicate
what
you
feel
as
a
token
holder
is
in
the
best
interest
of
the
protocol,”
he
continued.
“If
you
take
that
power
away
from
a
token
holder,
then
you’re
kind
of
chipping
away
at
the
fundamentals
of
decentralization.”
Correction
(Jan.
25,
02:34
UTC):
It’s
Interop
“Labs,”
not
Interop
“Foundation.”