Kraken Turns to Chainlink for Cross-chain Service as More Protocols Abandon LayerZero

Key Insights

• Kraken turns to Chainlink for cross-chain services, deprecating LayerZero infrastructure.
• Kraken says all its wrapped products would now rely on Chainlink CCIP.
• Chainlink’s CCIP has enjoyed significant adoption from several crypto projects in recent weeks following the LayerZero fiasco over KelpDAO rsETH.

US crypto exchange Kraken has picked Chainlink’s Cross-Chain Interoperability Protocol (CCIP) as its cross-chain infrastructure provider. The exchange disclosed this on X, stating that it is deprecating its existing cross-chain provider.

The exchange was previously using the LayerZero Omnichain Fungible Token (OFT) standard before making the switch.

Kraken Wrapped Assets To Be Issued on CCIP

According to Kraken, Chainlink CCIP will become the exchange’s exclusive cross-chain infrastructure provider.

The exchange cited CCIP’s validator architecture, independent verification system, and risk controls as key reasons behind the migration.

With the migration, Kraken wrapped Bitcoin (kBTC) will now be secured by CCIP. All other wrapped assets that plan to issue would also be issued through the same infrastructure.

Kraken launched kBTC in 2024, with wrapped Bitcoin available on Ethereum, Optimism, Unichain, and Kraken’s layer-2 network, Ink. It

It is not the only exchange using CCIP to securely move wrapped assets onchain. Coinbase also relies on the Chainlink infrastructure to support its over $7 billion in wrapped assets, including cbBTC, cbETH, cbXRP, cbDOGE, and cbLTC.

LayerZero Continues to Lose Adoption in Fallout From the KelpDAO rsETH Exploit

Meanwhile, Kraken’s migration away from LayerZero OFT represents another domino falling for LayerZero. The crosschain infrastructure provider has been in hot water since the $292 million exploit of KelpDAO’s rsETH.

While the DeFi community, led by Aave, has worked to restore rsETH backing, many in the crypto community attribute the blame for the incident to LayerZero.

This is mostly because the KelpDAO single-verifier setup on LayerZero enabled the exploit after the cross-chain protocol’s internal RPC nodes were compromised.

LayerZero had earlier issued a statement saying its infrastructure worked as intended. It said then that KelpDAO did not heed the recommendations of the multi-verifier setup.

However, the firm recently issued a new statement apologizing for the poor communication. It also acknowledged that it was at fault for allowing a single-verifier setup for such large transactions.

Still, publicly owning up to its fault might be coming too late for LayerZero, especially as security remains a major concern for DeFi protocols. KelpDAO has also disclosed plans to migrate to CCIP, as does Solv Protocol.

Unsurprisingly, the increasing adoption of CCIP is translating into a positive performance for the LINK token. LINK is up by almost 5% today, continuing a positive performance that has seen its price go up 17.72% in the past month.

By comparison, LayerZero’s ZRO token is down 26% over the past month. However, ZRO still has better year-to-date performance than LINK, with a 12% gain compared to a 15% loss.

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