Kelp DAO Disputes LayerZero's Account of $290 Million Disaster, Claims Default Settings Were to Blame

A recent $290 million exploit has sparked a heated debate between Kelp DAO and LayerZero, with Kelp set to challenge LayerZero's post-mortem report. According to a source familiar with the matter, Kelp plans to argue that the compromised verifier was actually part of LayerZero's own infrastructure, and that the setup it was using was based on LayerZero's default onboarding configuration. Kelp, a liquid restaking protocol, takes user-deposited ether and routes it through a yield-generating system called EigenLayer, issuing a receipt token called rsETH in exchange. LayerZero, a cross-chain messaging firm, moves rsETH between blockchains using decentralized verifier networks (DVNs) to verify cross-chain transfers. The exploit occurred when attackers drained 116,500 rsETH, worth around $290 million, from Kelp's LayerZero-powered bridge by poisoning the servers that LayerZero's verifier relied on. Kelp claims that the attackers compromised two of LayerZero's own servers, then flooded the backup servers with junk traffic to force LayerZero's verifier onto the compromised ones. The source also contested LayerZero's claim that Kelp chose a 1-of-1 DVN setup despite recommendations to configure multi-DVN redundancy, stating that LayerZero's own quickstart guide and default GitHub configuration point to a 1/1 DVN setup. Security researchers have also questioned LayerZero's account, with one expert noting that LayerZero's reference setup ships with single-source verification defaults across every major chain. Chainlink community manager Zach Rynes accused LayerZero of deflecting responsibility for its own compromised infrastructure and throwing Kelp under the bus for trusting a setup LayerZero itself supported.