@LorenzoProtocol's investment in security is something many people are not aware of. On the surface, it looks like just a BTC packaging protocol, but in reality, there is a whole set of multi-layered protection systems behind it, from smart contract auditing to fund custody, from reserve proof to real-time monitoring, every link has redundancy design.
First, let's talk about auditing. Lorenzo didn't just hire an auditing company to go through the motions; instead, he found three different security companies for cross-auditing: Zellic, CertiK, and Cyberscope. These three companies have completely different auditing styles: Zellic focuses on formal verification of underlying code, CertiK emphasizes real-time monitoring and threat detection, while Cyberscope pays more attention to economic models and governance mechanisms.
Zellic's audit report in April 2024 identified a high-risk vulnerability involving a boundary condition handling in the BTC staking contract. Specifically, when users simultaneously initiate multiple staking transactions, there may be inconsistencies in state. If exploited, attackers could mint stBTC exceeding actual reserves. The Lorenzo team completely fixed this issue before the mainnet launch by introducing a global lock to ensure that staking operations from the same address are executed serially.
CertiK's audit is more comprehensive. It not only reviews the code but also simulates various attack scenarios, such as reentrancy attacks, flash loan attacks, governance attacks, etc. The audit report from August 2025 did not find critical issues but proposed some optimization suggestions, such as adding checks-effects-interactions pattern checks before certain external calls. Lorenzo adopted and implemented all of these suggestions.
CertiK Skynet will start monitoring Lorenzo's contracts from November 2025. This system will analyze on-chain transaction behaviors in real time and identify abnormal patterns. For example, if a large amount of stBTC is suddenly redeemed or a specific address conducts frequent minting and burning operations in a short period, the system will immediately issue an alert, allowing the Lorenzo team to intervene and investigate promptly.
Skynet gave Lorenzo a security score of 91.36. This score places it in the top 15% among thousands of projects monitored by CertiK. The scoring dimensions include code quality, permission management, external dependencies, governance mechanisms, etc. Lorenzo scored highest in code quality and permission management, while slightly lower on external dependencies due to reliance on multiple cross-chain bridges and oracles, which increased system complexity.
The audit of USD1+ OTF by Cyberscope is particularly noteworthy because OTF products involve off-chain strategy execution, making the audit complexity much greater than that of pure on-chain protocols. Cyberscope not only reviews smart contracts but also examines the operational processes of the strategy execution team, fund custody solutions, risk control measures, etc. The final conclusion is that the collateral adequacy and profit distribution mechanism of USD1+ meet design expectations.
In terms of fund custody, Lorenzo adopts a multi-institutional decentralized custody solution. COBO, CEFFU, and ChainUp each hold part of the private key and use a 2-of-3 or 3-of-5 multi-signature configuration. This means that any movement of funds requires the consent of at least two institutions, so even if a single institution is breached, it cannot transfer funds.
COBO is one of the largest digital asset custody institutions in Asia. Its MPC technology allows for signing without exposing the complete private key. The principle of this technology is to store private key shards on different servers, and during signing, cryptographic protocols are used to complete the computation among multiple parties, ultimately generating a valid signature without any party having access to the complete private key.
CEFFU is a custody service provider in the Binance ecosystem. Its advantage lies in having Binance's endorsement and insurance support. In the event of a fund loss, compensation can be obtained within certain limits. Lorenzo chose CEFFU as one of the custodians, which provides users with additional security assurance to some extent.
ChainUp provides a custody solution that separates hot and cold wallets. Most funds are stored in cold wallets, with only the necessary liquidity kept in hot wallets for daily operations. This configuration minimizes potential losses from attacks on hot wallets. Even if hackers breach the hot wallet, they can only take a limited amount of funds, while the majority in the cold wallet remains secure.
The PoR (Proof of Reserves) mechanism is a core part of Lorenzo's security system. Traditional BTC wrapping projects typically have periodic audits, such as having an auditing firm verify reserves once a month or quarter. However, Lorenzo's PoR is real-time, allowing users to check the current reserve status at any time through on-chain contracts.
How is this real-time verification achieved? Lorenzo submits Bitcoin block headers to the Lorenzo chain through a Bitcoin Relayer and then uses Merkle proof to verify the balance of the custodian address. The advantage of Merkle proof is that it can prove the existence of a transaction without exposing the complete block data, and the verification cost is very low, allowing ordinary users to run a node for verification.
PoR not only verifies the balance but also checks the availability of these BTCs, such as whether the UTXOs of the custodian address are locked and whether the multi-signature configuration is correct. The distribution of private keys among various institutions is also transparent. Anyone can independently verify this information.
Since the mainnet launch in 2024, Lorenzo has not experienced any security incidents, no funds have been stolen, no contracts have been attacked, and there have been no situations of insufficient reserves. This record is quite rare in the DeFi industry. It is known that every year, billions of dollars in funds are lost in various DeFi attacks, and maintaining a zero-accident record requires excellence at every stage.
The multi-bridge strategy is also part of the security design. Lorenzo simultaneously uses Wormhole, LayerZero, and Chainlink CCIP. If a particular bridge encounters security issues, it can immediately switch to another bridge for continued operation, preventing the entire system from collapsing due to a single point of failure. Although this redundancy design increases costs, it significantly enhances the system's risk resistance.
In terms of governance security, Lorenzo has implemented many protective measures. For example, major decisions require a time lock. Proposals do not get executed immediately after approval but wait for a period of time. This waiting period gives the community a chance to react. If a proposal is found to have issues, it can be revoked through an emergency governance mechanism. This mechanism prevents malicious proposals from being quickly passed and causing losses.
The token lock-up mechanism is also part of the security design. The tokens of the team and investors will be linearly unlocked over 60 months. This long period ensures that their interests are tied to the long-term development of the protocol, preventing short-term cashing out. This is an important security assurance for users.
The smart contract upgrade mechanism uses a proxy model. The logic contract can be upgraded, but upgrades require multi-signature authorization and a time lock. This means that the development team cannot upgrade at will. This mechanism balances flexibility and security, allowing bug fixes and new features to be added while preventing malicious upgrades.
From an overall security architecture perspective, a depth defense approach is adopted, relying not on a single protective measure but on multiple layers of protection. The code layer has auditing and formal verification, the operational layer has professional custody and multi-signature, the monitoring layer has real-time detection and alerts, and the governance layer has time locks and community reviews. This multi-layered protection ensures that even if one layer is breached, there are other defenses to stop the attack.
