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

A recent crypto controversy has erupted, with Kelp DAO pushing back against LayerZero's post-mortem analysis of the $290 million exploit. 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 in question was LayerZero's default configuration. Kelp, a liquid restaking protocol, utilizes LayerZero's cross-chain messaging infrastructure to move its receipt token, rsETH, between blockchains. However, on Saturday, attackers drained approximately $290 million worth of rsETH by poisoning the servers that LayerZero's verifier relied on. Kelp claims that the compromised decentralized verifier network (DVN) was built and run by LayerZero, not a third-party entity. The source also disputed LayerZero's assertion that Kelp chose a 1-of-1 DVN setup despite recommendations to configure multi-DVN redundancy, stating that LayerZero's own quickstart guide and default GitHub configuration point to a 1/1 DVN setup. In fact, 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 reviewed LayerZero's public deployment code and found that the reference setup ships with single-source verification defaults across every major chain. Chainlink community manager Zach Rynes alleged that LayerZero was deflecting responsibility for its own compromised infrastructure and throwing Kelp under the bus for trusting a setup LayerZero itself supported. As a result, 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 operated on LayerZero infrastructure since January 2024, maintaining close communication with the LayerZero team.