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

A recent $290 million crypto disaster has sparked a heated debate between Kelp DAO and LayerZero, with each side blaming the other for the security breach. Kelp DAO, a liquid restaking protocol, is pushing back against LayerZero's claims that it was responsible for the exploit due to its use of a 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 it used was the default configuration recommended by LayerZero. The incident 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 to check transactions. Kelp claims that the attackers compromised two of LayerZero's own servers, which were used to verify cross-chain transactions, and 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, arguing that LayerZero's own quickstart guide and default GitHub configuration point to a 1/1 DVN setup, which is also used by 40% of protocols on LayerZero. Security researchers have also questioned LayerZero's framing of the incident, with one researcher pointing out that LayerZero's reference setup ships with single-source verification defaults across every major chain. The incident has sparked a wider debate about the security risks associated with cross-chain messaging protocols and the need for greater transparency and accountability in the crypto industry.