Key Points
- Kraken transitions its kBTC wrapped Bitcoin product from LayerZero to Chainlink’s CCIP protocol
- The infrastructure change comes after a devastating $292 million security breach on Kelp DAO’s LayerZero bridge in April 2026
- More than $3 billion in total value locked has shifted from LayerZero to Chainlink infrastructure in recent weeks
- Kraken becomes the fourth major protocol to abandon LayerZero, following Kelp, Solv, and Re
- Coinbase previously executed a similar transition to Chainlink CCIP for approximately $7 billion in wrapped assets
Cryptocurrency exchange Kraken has revealed plans to discontinue LayerZero as the cross-chain bridge solution for kBTC, its wrapped Bitcoin offering, in favor of Chainlink’s Cross-Chain Interoperability Protocol (CCIP).
The strategic pivot follows a devastating $292 million security breach that compromised Kelp DAO in April 2026. Cybersecurity experts believe the attack was orchestrated by North Korea’s notorious Lazarus Group, who exploited vulnerabilities in Kelp’s LayerZero-enabled bridge operating with a single-verifier setup.
In explaining the transition, Kraken emphasized that Chainlink CCIP delivers “enterprise-grade infrastructure with strict security and risk management requirements.”
Chainlink’s CCIP architecture mandates validation from 16 independent node operators for every cross-chain transaction. The protocol incorporates built-in rate limiting mechanisms and maintains both ISO 27001 and SOC 2 Type 2 security certifications.
Kraken’s kBTC represents a bitcoin-backed token with 1:1 backing, originally introduced in 2024. The asset currently maintains a market capitalization near $260 million and approximately $333 million in total value locked, based on DeFiLlama data.
The infrastructure upgrade encompasses multiple blockchain networks, including Ethereum, Ink, Unichain, and Optimism, with additional chains planned. Chainlink will serve as the infrastructure provider for all upcoming Kraken wrapped asset products.
Growing Trend of LayerZero Abandonment
Kraken joins three other prominent protocols that have discontinued LayerZero services following the Kelp security incident. Kelp DAO, Solv Protocol, and Re have all executed similar migrations, collectively accounting for approximately $2.57 billion in total value locked.
A Chainlink representative verified that more than $3 billion in TVL has transitioned to Chainlink infrastructure recently, including a shift from Tydro, the primary lending platform on Kraken’s Ink blockchain.
LayerZero initially disputed responsibility for the Kelp compromise. While the company had previously advised Kelp to implement a more secure multi-signer configuration, it subsequently acknowledged inadequate communication as a contributing factor.
Post-incident analysis revealed that 47% of applications utilizing LayerZero operated with a single-verifier configurationāthe identical setup exploited during the Kelp breach.
LayerZero has announced it will discontinue support for 1/1 Decentralized Verifier Network configurations and has initiated comprehensive security enhancements.
Market Reaction and Industry Implications
The DeFi ecosystem mobilized over $320 million through the DeFi United initiative to restore rsETH backing and provide restitution to impacted users.
Coinbase executed a comparable infrastructure migration previously, adopting Chainlink CCIP as the exclusive bridge solution for roughly $7 billion in wrapped token assets.
Separately, Kraken’s parent entity, Payward, submitted an application this month for federal trust charter status to operate as a federally regulated cryptocurrency banking institution.
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