Kelp DAO Disputes LayerZero's Account of $290 Million Exploit, Citing Default Settings as Culprit

A recent exploit resulting in a $290 million loss has sparked a heated debate between Kelp DAO and LayerZero. Kelp DAO, a liquid restaking protocol, is pushing back against LayerZero's post-mortem analysis, which blamed Kelp for ignoring warnings about its single-verifier setup. 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 was based on LayerZero's default onboarding configuration. The incident occurred when attackers drained 116,500 rsETH, worth approximately $290 million, from Kelp's LayerZero-powered bridge by poisoning the servers that LayerZero's verifier relied on to check transactions. Kelp claims that the compromised infrastructure was built and run by LayerZero, not Kelp. The source also contested LayerZero's claim 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. Security researchers have also questioned LayerZero's account, with one researcher noting that LayerZero's reference setup ships with single-source verification defaults across every major chain. The incident has led to a protocol-wide migration, with LayerZero announcing that it will no longer sign messages for any application running a single-verifier setup.