Blockchain interoperability project LayerZero has lost a dozen partners this year as its ZRO token shed a third of its value.
The latest departure, Ethereum node service provider Nethermind, ran one of the verifiers that LayerZero advertised to enterprise users. It migrated to one of LayerZero’s competitors and terminated its role as verifier on Wednesday.
It joins a long list.
- Kelp DAO exited LayerZero in May after it lost $292 million through a bridge that a single LayerZero verifier secured.
- Solv Protocol deprecated its LayerZero bridges two days later, with Re.xyz making the same move.
- The following week, Kraken shifted its kBTC BTC-linked token off LayerZero, while Lombard pulled over $1 billion of BTC-backed assets one day later.
- Virtuals Protocol left LayerZero in June. Yuzu Money completed its exit in early July, and Mantle swapped out its Super Portal days later.
- BitGo took $7.7 billion of wrapped BTC out of LayerZero’s ecosystem in August.
- Huma Finance declined to use LayerZero for its product launched earlier this year.
Even the Wyoming Stable Token Commission, the lone state government in the pack of LayerZero partners, dropped its token bridge on Tuesday.
LayerZero targeted by Lazarus Group
More than $7 billion in assets had migrated off LayerZero by early July. BitGo’s exit lifted the tally toward $15 billion.
The panic began after LayerZero admitted that hackers at Lazarus Group poisoned its internal RPCs in April.
“We made a mistake by allowing our DVN to act as a 1/1 DVN for high-value transactions,” it said.
Protos documented the immediate fallout from that incident, with Aave pausing ETH-pegged token markets from LayerZero as depositors rushed for the exits.
Read more: Aave TVL still down 43% since KelpDAO hack
Hard to recover from an 88% drawdown
LayerZero co-founder and CEO Bryan Pellegrino dismissed much of the early criticism as untrue.
Another defender argued that the departures amount to “about 3% of actual usage in volume and less than 1% of messages.”
Still, LayerZero has been retreating. ZRO, has lost 31% of its value this year, 56% over the past 12 months, and 88% from its December 2024 all-time high.
In July, it announced it was “winding down support for a number of chains with minimal activity across our offchain services and Stargate products.”
The same notice told Stargate users on those chains, “Failure to act before chain support is fully deprecated will result in losing access to your funds.”
LayerZero warned teams still using v1 libraries would face an August 3 shutoff.
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