Kelp DAO Disputes LayerZero's Claim of Responsibility in $290 Million Exploit

A recent $290 million disaster has sparked a heated debate between Kelp DAO and LayerZero, with Kelp set to dispute LayerZero's claim that it ignored warnings to move away from a single-verifier setup. According to a source familiar with the matter, Kelp plans to argue that the compromised verifier was actually LayerZero's own infrastructure and that the setup it was faulted for running was LayerZero's onboarding default. Kelp, a liquid restaking protocol, takes user-deposited ether, routes it through a yield-generating system called EigenLayer, and issues a receipt token, rsETH, in exchange. LayerZero's cross-chain messaging infrastructure moves rsETH between blockchains using entities called DVNs to verify whether a cross-chain transfer is valid. Attackers drained 116,500 rsETH, worth about $290 million, from Kelp's LayerZero-powered bridge by poisoning the servers that LayerZero's verifier relied on to check transactions. Kelp claims that the DVN that was compromised was LayerZero's own infrastructure, not a third-party verifier, and that all of that infrastructure was built and run by LayerZero, not Kelp. The source contested LayerZero's framing of the '1/1 configuration' as a fringe choice made against guidance, stating that LayerZero's post-mortem said KelpDAO chose a 1-of-1 DVN setup despite expressing recommendations to configure multi-DVN redundancy. However, the source added that through a direct communications channel with LayerZero, which has been open since July 2024, they produced no specific recommendation for Kelp to change the rsETH DVN configuration. LayerZero's own quickstart guide and default GitHub configuration point to a 1/1 DVN setup, and 40% of protocols on LayerZero are currently using the same configuration. Security researchers are also not buying LayerZero's isolated framing, which pinned the blame on Kelp, with some accusing LayerZero of deflecting responsibility for its own compromised infrastructure.