Kelp DAO Disputes LayerZero's Claims Over $290 Million Loss, Alleges Default Settings Were to Blame

A recent $290 million exploit has sparked a heated debate between Kelp DAO and LayerZero, with each side pointing fingers at the other. Kelp DAO is now pushing back against LayerZero's claims that it was responsible for the loss due to its use of a single-verifier setup. According to sources, Kelp plans to argue that the compromised verifier was actually part of LayerZero's own infrastructure and that the setup in question was the default configuration recommended by LayerZero. 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 verify transactions. Kelp claims that all of the infrastructure involved was built and run by LayerZero, not Kelp. Furthermore, Kelp argues that LayerZero's own quickstart guide and default GitHub configuration point to a 1/1 DVN setup, which is the same configuration that Kelp used. In fact, 40% of protocols on LayerZero are currently using the same configuration. Security researchers have also weighed in, with some accusing LayerZero of deflecting responsibility for its own compromised infrastructure. Yearn Finance core team developer Artem K noted that LayerZero's reference setup ships with single-source verification defaults across every major chain, and that the deployment leaves a public endpoint exposed that leaks the list of configured servers to anyone who queries it. Chainlink community manager Zach Rynes was more blunt, stating that LayerZero was 'deflecting responsibility' for its own compromised infrastructure and accusing the company of throwing Kelp under the bus for trusting a setup that LayerZero itself supported. The incident has sparked a wider debate about the security of cross-chain messaging protocols and the need for greater transparency and accountability in the industry.