Kelp DAO Disputes LayerZero's Account of $290 Million Exploit, Citing Default Settings as Culprit

A recent $290 million exploit has sparked a heated debate between Kelp DAO and LayerZero, with Kelp set to dispute LayerZero's claims that it ignored warnings about its single-verifier setup. 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 was based on LayerZero's default configuration. The exploit occurred when attackers drained 116,500 rsETH, worth approximately $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 attackers compromised two of LayerZero's own servers and then flooded the backup servers with junk traffic to force LayerZero's verifier onto the compromised ones. The source also contested LayerZero's framing of the '1/1 configuration' as a fringe choice made against guidance, pointing out that LayerZero's own quickstart guide and default GitHub configuration recommend 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. The incident has sparked a wider debate about the risks of contagion in the DeFi space and the need for greater transparency and accountability.