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

A recent cryptocurrency exploit has sparked a heated debate between Kelp DAO and LayerZero, with each side blaming the other for the $290 million disaster. The controversy surrounds the configuration of LayerZero's decentralized verifier networks, which Kelp DAO claims was set up according to LayerZero's own default settings. Kelp DAO, a liquid restaking protocol, had been using LayerZero's cross-chain messaging infrastructure to move its rsETH tokens between blockchains. However, on Saturday, attackers drained 116,500 rsETH, worth about $290 million, from Kelp's LayerZero-powered bridge by compromising LayerZero's own servers. Kelp DAO is now pushing back against LayerZero's post-mortem, which blamed Kelp for ignoring warnings to move away from a single-verifier setup. According to a source familiar with the matter, Kelp DAO plans to argue that the compromised verifier was LayerZero's own infrastructure and that the setup it was faulted for running was LayerZero's onboarding default. The source also claimed that LayerZero's quickstart guide and default GitHub configuration point to a 1/1 DVN setup, which is the same configuration used by 40% of protocols on LayerZero. Kelp DAO's core restaking contracts were not touched, and the exploit was isolated to the bridge layer. 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 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 alleged that LayerZero was deflecting responsibility for its own compromised infrastructure and accused the company of throwing Kelp under the bus for trusting a setup LayerZero itself supported. The incident has sparked a wider debate about the security of cross-chain messaging infrastructure and the need for greater transparency and accountability in the cryptocurrency space.