Lombard Moves $1B Bitcoin Assets To Chainlink After KelpDAO Exploit

Lombard is moving more than $1 billion in Bitcoin-backed assets from LayerZero to Chainlink’s Cross-Chain Interoperability Protocol, marking one of the largest infrastructure shifts since the KelpDAO bridge exploit. The change affects Lombard’s core Bitcoin assets, including LBTC and BTC.b, and puts Chainlink CCIP at the center of the project’s cross-chain stack.

The migration follows a security review of the cross-chain infrastructure behind LBTC and BTC.b. Lombard plans to replace LayerZero with Chainlink CCIP across major routes and fully phase out LayerZero on Morph and Swell. Separate route updates are expected across chains including Solana, Etherlink, Berachain, Corn and TAC.

LBTC and BTC.b are central to Lombard’s Bitcoin DeFi strategy. LBTC gives users a yield-bearing Bitcoin asset tied to Babylon staking, while BTC.b is a 1:1 Bitcoin-backed asset that Lombard acquired from Ava Labs in 2025. Together, they give Bitcoin holders more ways to move BTC exposure through lending markets, liquidity pools and collateral systems across multiple chains.

The size of the migration makes the decision more than a routine bridge upgrade. Cross-chain messaging is part of the custody and settlement risk stack for tokenized Bitcoin. When the bridge layer changes, the trust model behind transfers, minting, burning and redemption changes with it.

KelpDAO Exploit Reshaped Bridge Risk

The decision lands after the April KelpDAO exploit, which drained about $292 million in rsETH from a LayerZero-based bridge configuration. Chainalysis tied the incident to attackers linked to North Korea’s Lazarus Group and described it as an off-chain infrastructure attack rather than a smart-contract exploit. The attacker used false cross-chain data to release 116,500 rsETH against a burn that did not exist.

The technical lesson was harsh. KelpDAO’s bridge relied on a 1-of-1 Decentralized Verifier Network setup, meaning one verifier path could authorize the message needed to release assets. When that verification layer was manipulated, the on-chain transaction looked valid even though the underlying cross-chain event was false.

The damage quickly moved beyond KelpDAO. The stolen rsETH was supplied as collateral across lending markets, creating downstream stress for Aave, Compound and other DeFi liquidity pools. Arbitrum’s Security Council froze 30,766 ETH tied to the attacker, while Aave later worked through a plan to rebuild rsETH collateral backing and manage affected positions.

That chain of events changed how protocols are treating cross-chain infrastructure. A bridge is no longer just a routing tool. For large Bitcoin-backed assets, it becomes part of the asset’s solvency and liquidity assumptions.

CCIP Gains From A Wider LayerZero Exit

Lombard is not moving alone. More than $4 billion in assets have either migrated or started migrating from LayerZero-based infrastructure to Chainlink CCIP across projects including KelpDAO, Solv, Re, Kraken and Lombard. Kraken recently selected CCIP for kBTC and future wrapped assets, while Solv moved hundreds of millions of dollars in tokenized Bitcoin products to the same system.

That does not make CCIP risk-free. It concentrates more cross-chain value into one interoperability provider, which creates a different kind of dependency if more Bitcoin, restaking and RWA assets standardize around the same rails. Still, the market signal is clear: after the KelpDAO incident, protocols are prioritizing multi-layer validation, monitoring and configurable transfer controls over lighter cross-chain setups.

For Lombard users, the key question is whether the migration improves security without hurting liquidity. Bitcoin-backed assets need reliable transfers, clear backing, fast settlement and predictable redemption paths to work as collateral in DeFi. A safer bridge with weaker liquidity would slow adoption. Stronger security with smooth routing would make LBTC and BTC.b more credible as cross-chain Bitcoin collateral.

The migration puts Lombard near the center of Bitcoin DeFi’s post-KelpDAO security reset. More than $1 billion in Bitcoin-backed assets is now being rerouted through Chainlink CCIP, while the wider market watches whether LayerZero can regain confidence after one of the largest DeFi infrastructure failures of 2026.

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