Decentralized finance protocols are reevaluating their blockchain oracle suppliers’ safety after the fallout from the $293 million Kelp DAO exploit final month. A number of protocols have introduced migrations to Chainlink infrastructure in latest days, citing safety considerations round third-party oracle and bridge suppliers.
On Thursday, Bitcoin DeFi platform Solv Protocol introduced it will migrate to Chainlink’s Cross-Chain Interoperability Protocol (CCIP) and change LayerZero bridges, citing an “in depth safety assessment” concluding that CCIP offered the “strongest safety assurances.”
A day earlier, liquidity protocol Tydro additionally stated it was transferring to Chainlink after its earlier oracle supplier, Chaos Labs, suffered an incident that prompted Tydro to pause markets over considerations about inaccurate worth feeds.
The migrations come after an April 18 exploit through which attackers drained 116,500 Kelp DAO restaked ETH (rsETH) tokens value between $290 million and $293 million. Following the exploit, Kelp DAO additionally migrated its rsETH token to Chainlink, transferring away from its earlier LayerZero-powered bridge after attributing the incident to weaknesses in its cross-chain setup.
Supply: Solv Protocol
LayerZero, nevertheless, stated on April 20 that the exploit resulted from a single level of failure in Kelp DAO’s implementation, which relied on a single LayerZero DVN as the one verified path regardless of prior warnings in opposition to that configuration.
DeFi protocols assessment oracle safety after Kelp exploit
The Kelp DAO exploit triggered a “wake-up name” for DeFi suppliers, in keeping with Zach Rynes, strategic initiatives lead at Chainlink Labs.
Associated: Aave liquidates Kelp DAO hacker’s rsETH positions on Ethereum, Arbitrum
Rynes advised Cointelegraph that DeFi groups conducting safety critiques are more and more deciding to interchange older oracle and bridge methods with Chainlink infrastructure to strengthen baseline safety protections, and a number of different DeFi protocols are discussing potential migrations to Chainlink following the exploit.
Oracle suppliers with lengthy working histories and powerful reliability have gotten more and more vital as hacks proceed throughout the sector, Marcin Kazmierczak, co-founder of RedStone, the fourth-largest blockchain oracle supplier, advised Cointelegraph, including that RedStone has additionally stored a “totally dependable observe file.”
Redstone was additionally contacted by Tydro as an emergency measure after the Chaos Labs oracle assault and offered help to assist restore oracle feeds for the protocol.
Supply: Redstone
Oracle consolidation raises new questions for DeFi
Following the Kelp DAO exploit, solely a smaller group of specialised suppliers might be able to meet the “demand and reliability necessities” created by rising institutional participation in DeFi, Kazmierczak stated.
“A smaller set of trusted oracles is forming available in the market,” he stated, including that as capital concentrates round suppliers with confirmed observe information, the danger of oracle-related exploits may decline.
When requested in regards to the dangers of a number of DeFi protocols relying on fewer suppliers, Rynes stated Chainlink’s infrastructure was designed to face up to excessive market situations.
He pointed to intervals together with the 2020 Covid market crash, the 2022 FTX collapse and main volatility occasions in 2025, saying Chainlink continued working all through these disruptions.
Associated: Arbitrum vote to launch $71M in frozen Kelp exploit ETH set to cross
Nik Kunkel, founding father of Chronicle, the second-largest oracle supplier, stated that an overreliance on a single infrastructure supplier will all the time current further dangers.
“There are dangers anytime a big portion of an ecosystem is determined by a single piece of infrastructure,” Kunkel advised Cointelegraph, including that decreasing these dangers additionally requires information infrastructure to stay independently clear and verifiable.
Prime Oracle suppliers by market share. Supply: DefiLlama.com
Chainlink stays the most important oracle supplier with a 58% market share and greater than $32 billion in worth secured, in accordance to DefiLlama. Chronicle ranks second with $7.6 billion in whole worth secured, whereas RedStone holds fourth place with $3.7 billion, representing a 6.7% market share.
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