Kelp DAO Disputes LayerZero's Claim of Responsibility for $290 Million Loss

A recent cryptocurrency exploit has sparked a heated debate between Kelp DAO and LayerZero, with each party blaming the other for the massive $290 million loss. The incident occurred when attackers drained 116,500 rsETH, worth approximately $290 million, from Kelp's LayerZero-powered bridge by compromising the servers that LayerZero's verifier relied on to check transactions. Kelp DAO is now pushing back against LayerZero's post-mortem analysis, which essentially blames Kelp for ignoring repeated warnings to move away from a single-verifier setup. According to a source familiar with the matter, Kelp plans to dispute this claim, arguing that the compromised verifier was part of LayerZero's own infrastructure and that the setup was based on LayerZero's default configuration. The source claims that LayerZero's own quickstart guide and default GitHub configuration point to a 1/1 DVN setup, which is the same configuration used by Kelp. Furthermore, the source notes that 40% of protocols on LayerZero are currently using the same configuration. 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 on X, posted a technical review of LayerZero's public deployment code, which shows that the reference setup ships with single-source verification defaults across every major chain. Chainlink community manager Zach Rynes has also 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.