By bridging wstETH to other chains, LayerZero is aiming to unlock new opportunities and use cases for the token within those ecosystems.
Blockchain interoperability protocol LayerZero has introduced a new capability to transfer wrapped staked Ethereum (wstETH) across multiple blockchain networks. This new functionality aims to enhance the portability and accessibility of the popular staked Ethereum derivative token.
Cross-Chain Transfer Now Available
The transfer feature is now live on Ethereum, Avalanche, BNB Chain, and Scroll. By integrating wstETH with LayerZero’s omnichain fungible token (OFT) standard, the protocol can facilitate seamless movement of the asset between different blockchains. This is seen as a significant development for decentralized finance (DeFi), as it allows users to access and utilize wstETH across more chains beyond just Ethereum.
— LayerZero Labs (@LayerZero_Labs) October 25, 2023
For those unfamiliar, wstETH is a wrapped token representing staked Ethereum (ETH) in the Lido Finance liquid staking protocol. Lido allows ETH holders to stake their assets while receiving liquid stETH tokens in return, which can be used across DeFi apps. wstETH is the wrapped version of stETH. Lido Finance currently has the highest total value locked among liquid staking protocols, with approximately $15.85 billion in assets staked. LayerZero’s integration expands the reach and utility of wstETH from this prominent Ethereum staking solution.
By bridging wstETH to other chains, LayerZero is aiming to unlock new opportunities and use cases for the token within those ecosystems. For example, users can potentially access expanded DeFi activities as well as new staking yield opportunities on chains like Avalanche and BNB Chain. The head of DeFi and developer relations at Ava Labs, Luigi D’Onorio DeMeo, in reacting to this feat, said:
“ETH is a staple asset within Avalanche’s DeFi ecosystem, and the ability to obtain staking yield through Lido’s stETH and LayerZero’s OFT infrastructure helps to foster Avalanche’s LSD growth.”
There Is No Official Backing Yet from Lido Finance
It should be noted that this wstETH integration has been implemented independently by LayerZero and has not yet received any official endorsement from Lido Finance. While significant, the feature does not reflect an official collaboration between the two protocols at this point. This was addressed in a tweet by Defiyaco, Master of DeFi at Lido, where he said:
“I want to address the recent announcements related to wstETH deployments on new networks (Base, zkSync, BNB, Avalanche, and Scroll). None of these implementations have been formally accepted by Lido DAO yet. It requires them to be voted in.”
LayerZero’s work highlights the fast-evolving blockchain landscape, where interoperability solutions are expanding the reach of assets and protocols beyond their native chains. As bridges like LayerZero enhance connectivity between ecosystems, users can expect more flexibility in accessing and utilizing decentralized technologies going forward. However, official collaboration and approval between protocols remain important for long-term integration.