Kelp DAO Disputes LayerZero's Claims Regarding $290 Million Disaster

A recent cryptocurrency exploit has sparked a heated debate between Kelp DAO and LayerZero, with each side assigning blame for the $290 million disaster. Kelp DAO, a liquid restaking protocol, claims that the compromised verifier was part of LayerZero's own infrastructure and that the setup in question was the default configuration provided by LayerZero. According to a source familiar with the matter, Kelp DAO plans to dispute LayerZero's post-mortem analysis, which blames Kelp for ignoring warnings about the single-verifier setup. The incident 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 verify transactions. Kelp DAO argues that the compromised decentralized verifier network (DVN) was built and run by LayerZero, not by Kelp, and that the 1/1 configuration used was the default setup recommended by LayerZero. The source also claims that LayerZero's quickstart guide and default GitHub configuration point to a 1/1 DVN setup, which is currently used by 40% of protocols on LayerZero. Security researchers have also questioned LayerZero's framing of the incident, with some accusing the company of deflecting responsibility for its own compromised infrastructure. Yearn Finance core team developer Artem K, also known as @banteg, posted a technical review of LayerZero's public deployment code, noting that the reference setup ships with single-source verification defaults across every major chain. Chainlink community manager Zach Rynes accused LayerZero of throwing Kelp under the bus for trusting a setup that LayerZero itself supported. In response to the incident, LayerZero has announced that it will no longer sign messages for any application running a single-verifier setup, forcing a protocol-wide migration. Kelp DAO has confirmed that the 1-of-1 DVN setup at the center of the incident reflects LayerZero's documented default configuration and has called for a shared and accurate account of what happened to make the necessary fixes.