Kelp DAO Disputes LayerZero's Claims Over $290 Million Exploit, Citing Default Settings

A recent cryptocurrency exploit has sparked a heated debate between Kelp DAO and LayerZero, with Kelp set to challenge LayerZero's claims that it was responsible for the $290 million disaster. According to a source familiar with the matter, Kelp plans to argue that the compromised verifier was part of LayerZero's own infrastructure and that the setup was based on LayerZero's default configuration. 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 claims that the attackers compromised two of LayerZero's own servers and then flooded the backup servers with junk traffic, forcing LayerZero's verifier onto the compromised ones. The source 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. In fact, 40% of protocols on LayerZero are currently using the same configuration. Kelp's core restaking contracts were not touched, and the exploit was isolated to the bridge layer. The incident has sparked a wider debate about the security of cryptocurrency protocols, with some security researchers arguing that LayerZero is deflecting responsibility for its own compromised infrastructure. Yearn Finance core team developer Artem K 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 'deflecting responsibility' for its own compromised infrastructure and throwing Kelp under the bus for trusting a setup that LayerZero itself supported. In response to the incident, LayerZero has said 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 operated on LayerZero infrastructure since January 2024, maintaining close communication with the LayerZero team.