Interoperability Centralizes Crypto: Bridges and Oracles Reintroduce Single-Point Control
Crypto’s promise of decentralization is weakening at the interoperability layer, where value movement between chains is increasingly mediated by a small set of centralized intermediaries. Michael Steuer, CTO of Casper Network, argues that user-experience choices and the industry’s reliance on cross-chain bridges, messaging and verification systems have concentrated control with providers like Chainlink, LayerZero and Axelar. Bridges require users to manage network choices, wallets and fees, exposing assets to permanent loss and security breaches; bridges have been targeted in large hacks and are also used for money laundering. Messaging/verification layers, while not custodial, gatekeep which cross-chain messages are recognized, creating chokepoints outside underlying networks’ control. This fragmentation forces users to commit to specific chains, reinforcing tribalism (e.g., Bitcoin maximalists, XRP army) and incentivizing protocols to protect ecosystems rather than reduce friction. The result: decentralization remains at protocol level but coordination, usability and access concentrate with centralized infrastructure, limiting mass adoption and exposing markets to systemic risks tied to a few interoperability providers.
Bearish
This analysis points to increased centralization and systemic risk at the interoperability layer — a core infrastructure that affects many tokens and DeFi activity. Centralized chokepoints (bridges, messaging/verification providers) amplify counterparty, smart-contract and custodial risks. Historically, major bridge hacks (e.g., Ronin, Wormhole, Harmony’s Horizon) triggered sharp, immediate sell-offs across DeFi and correlated tokens, hurting liquidity and confidence. Traders may decrease exposure to bridged assets, rotate into on-chain native liquidity, or favor major chains perceived as safer, producing short-term price weakness and heightened volatility for assets dependent on cross-chain flows. In the medium-to-long term, unless interoperable standards and safer trust-minimized bridges emerge, the market may price in a higher risk premium for cross-chain activity, slowing capital inflows and innovation that depends on seamless value transfer. Therefore the near-term impact is negative for assets and protocols reliant on current bridge and messaging providers, while neutral to mixed for well-secured, native ecosystems.