Decentralized finance protocols are reassessing the security of their Oracle blockchain providers following the fallout from the $293 million Kelp DAO exploit last month. In recent days, several protocols have announced their migration to Chainlink infrastructure, citing security concerns with third-party oracle and bridge providers.
On Thursday, the Bitcoin DeFi Solv Protocol platform announced would transition to Chainlink’s Cross-Chain Interoperability Protocol (CCIP) and replace LayerZero bridges, citing an “extensive security review” that found CCIP provided “the strongest security guarantees.”
The day before, Tydro’s liquidity protocol also he said moved to Chainlink after its previous Oracle provider, Chaos Labs, suffered an incident that prompted Tydro to pause its markets over concerns about incorrect price sources.
The migrations followed an April 18 exploit in which attackers siphoned off 116,500 Kelp DAO Restack ETH (rsETH) tokens worth between $290 million and $293 million. In the wake of the exploit, Kelp DAO also moved its rsETH token to Chainlink, moving away from its previous Layer Zero-based bridge after it attributed the incident to weaknesses in its cross-chain setup.
Source: Dissolution protocol
LayerZero, however he said On April 20, it was determined that the exploit resulted from a single point of failure in the Kelp DAO implementation, which relied on a single Zero DVN layer as the only verified path despite previous warnings against this configuration.
DeFi Protocols Check Oracle’s Security After Kelp Exploit
According to Zach Rynes, head of strategic initiatives at Chainlink Labs, the Kelp DAO exploit has galvanized DeFi providers into action.
Related: Aave liquidates DAO hacker Kelp’s rsETH positions on Ethereum, Arbitrum
Rynes told Cointelegraph that DeFi teams conducting security reviews are increasingly choosing to replace legacy Oracle and Bridge systems with Chainlink infrastructure to strengthen core security, and many other DeFi protocols are discussing potential migrations to Chainlink after an exploit.
Oracle vendors with long operating histories and robust reliability are becoming increasingly crucial as hacks continue across the sector, Marcin Kaźmierczak, co-founder of RedStone, the fourth-largest Oracle Blockchain vendor, told Cointelegraph, adding that RedStone also has a “fully reliable track record.”
Redstone was there too I contacted you by Tydro as an emergency measure after the Chaos Labs oracle attack and provided that support to facilitate restore Oracle channels for the protocol.
Source: Redstone
Oracle Consolidation Raises Fresh Questions for DeFi
In the wake of the Kelp DAO exploit, only a smaller group of specialized providers may be able to meet the “demand and reliability requirements” created by growing institutional participation in DeFi, Kazmierczak said.
“There is a smaller group of trusted oracles emerging in the market,” he said, adding that as capital concentrates around vendors with a proven track record, the risk of oracle exploits may decline.
Asked about the risks of multiple DeFi protocols depending on fewer providers, Rynes said Chainlink’s infrastructure was designed to withstand extreme market conditions.
He pointed to periods including the Covid market crash in 2020, the FTX crash in 2022, and major volatility events in 2025, claiming that Chainlink continued to operate throughout the disruptions.
Related: Arbitrum vote to release $71 million of frozen Kelp ETH exploit set to pass
Nik Kunkel, founder of Chronicle, Oracle’s second-largest vendor, said over-reliance on any one infrastructure provider will always create additional risks.
“There is a risk whenever a large part of the ecosystem depends on a single piece of infrastructure,” Kunkel told Cointelegraph, adding that mitigating this risk also requires that the data infrastructure remains independently lucid and auditable.
Top Oracle Vendors by Market Share. Source: DefiLlama.com
Chainlink remains Oracle’s largest supplier with 58% market share and over $32 billion in secured value, According to to DefiLlam. Chronicle ranks second with $7.6 billion in total value secured, while RedStone ranks fourth with $3.7 billion, representing 6.7% of market share.
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