Layer Zero’s ZRO token has experienced a notable uptick in its price over the previous week, witnessing a substantial 52% surge in value.
Is ZRO heading towards a bullish trend?
Despite the recent price surge of ZRO, analysis of Santiment’s data by CryptoCrypto revealed a decline in Network Growth, suggesting a waning interest from new users in the token at the time of reporting.
In addition, the Velocity had decreased, indicating a slowdown in the frequency of ZRO trading activity.
Challenges Ahead for LayerZero
Besides these factors, concerns over the security vulnerabilities of Layer Zero protocol could potentially overshadow the ZRO token.
An examination of the UXDProtocol under the SherlockDefi program by 0x52 unveiled potential issues within LayerZero.
Specifically, the critique highlighted a lack of constraints on message size and destination addresses within the Layer Zero endpoint contract, responsible for managing message flow across protocols.
This vulnerability poses a risk where a malicious actor could exploit it by sending a message with an excessively large destination address, leading to errors within the contract.
Such errors could disrupt communication among various blockchain networks, potentially resulting in substantial financial repercussions for protocols depending on LayerZero’s functionalities.
According to 0x52, this vulnerability could impact numerous protocols utilizing LayerZero, particularly those integrating both EVM (Ethereum Virtual Machine) chains and non-EVM chains like Solana that employ varying address sizes.
A Countering Perspective
Yet, LayerZero Labs did not stay silent in the face of these allegations. Bryan Pellegrino, the co-founder and CEO, stepped forward to address the concerns raised by 0x52.
Pellegrino contended that providing applications with the ability to configure payload limits was a deliberate design decision made with a specific objective in mind.
He elucidated that enforcing a rigid limit on message size could open up the potential for censorship, which contradicts LayerZero’s primary aim of promoting a censorship-resistant system.
Pellegrino further clarified the situation by underscoring the vintage of the code mentioned by 0x52, dating back to 2022 and related to application configuration rather than the core protocol itself.
This distinction is vital as it suggests that the vulnerability does not stem from the fundamental operations of LayerZero.
Pellegrino went on to explain that the payload size limit operates as part of an application’s security configurations, granting individual applications the flexibility to customize it as per their specific requirements.
Upon receiving this explanation, 0x52 retracted their previous tweets and aligned with Pellegrino’s stance.
Although the Weighted Sentiment surrounding ZRO was negative at the time of publication, there was a noticeable enhancement in the overall sentiment regarding the protocol compared to recent weeks.
If the sentiment continues to improve, it could potentially manifest in the movement of ZRO’s price. Currently, ZR is trading at $3.89.