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 might migrate to Chainlink’s Cross-Chain Interoperability Protocol (CCIP) and substitute LayerZero bridges, citing an “intensive safety overview” concluding that CCIP offered the “strongest safety assurances.”
A day earlier, liquidity protocol Tydro additionally stated it was shifting 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 wherein 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, shifting 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 overview oracle safety after Kelp exploit
The Kelp DAO exploit triggered a “wake-up name” for DeFi suppliers, based on Zach Rynes, strategic initiatives lead at Chainlink Labs.
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Rynes instructed Cointelegraph that DeFi groups conducting safety critiques are more and more deciding to interchange older oracle and bridge techniques 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 robust 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, instructed Cointelegraph, including that RedStone has additionally stored a “absolutely dependable monitor file.”
Redstone was additionally contacted by Tydro as an emergency measure after the Chaos Labs oracle assault and offered assist 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 monitor information, the chance of oracle-related exploits might 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 circumstances.
He pointed to durations 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 at all times current further dangers.
“There are dangers anytime a big portion of an ecosystem relies on a single piece of infrastructure,” Kunkel instructed Cointelegraph, including that lowering these dangers additionally requires knowledge 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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