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

A recent incident has sparked controversy in the crypto community, with Kelp DAO set to challenge LayerZero's account of the $290 million exploit that occurred on Sunday. According to a source familiar with the matter, Kelp plans to counter LayerZero's claim that it was responsible for the disaster due to its use of a single-verifier setup. The liquid restaking protocol claims that the compromised verifier was actually part of LayerZero's own infrastructure and that the setup was based on LayerZero's default onboarding configuration. The incident involved the theft of 116,500 rsETH, worth approximately $290 million, from Kelp's LayerZero-powered bridge. Kelp asserts 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 claims that all of the infrastructure involved was built and run by LayerZero, not Kelp. Kelp also contests 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. Security researchers have also questioned LayerZero's isolated framing, which pinned the blame on Kelp. 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 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 be established. The team behind LayerZero is working to harden security across every possible vector for applications, with co-founder Bryan Pellegrino stating that the initial investigations had been largely resolved and that the team would publish more updates soon.