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

A recent $290 million exploit has sparked a heated debate between Kelp DAO and LayerZero, with each side pointing fingers at the other. The incident occurred when attackers drained 116,500 rsETH, worth around $290 million, from Kelp's LayerZero-powered bridge by compromising the servers that LayerZero's verifier relied on. Kelp DAO is now set to dispute LayerZero's post-mortem of the incident, which blames Kelp for ignoring repeated warnings to move away from a single-verifier setup. According to a source familiar with the matter, Kelp plans to argue that the compromised verifier was actually LayerZero's own infrastructure, not a third-party verifier, and that the setup it was faulted for running was LayerZero's onboarding default. The source also claimed that LayerZero's own quickstart guide and default GitHub configuration point to a 1/1 DVN setup, which is the same configuration used by Kelp. Furthermore, the source stated that 40% of protocols on LayerZero are currently using the same configuration, and that LayerZero's own V2 OApp Quickstart guide uses the same 1/1 structure. Security researchers have also weighed in on the issue, with some accusing LayerZero of deflecting responsibility for its own compromised infrastructure. Yearn Finance core team developer Artem K, also known as @banteg on X, posted a technical review of LayerZero's public deployment code, which showed that the reference setup ships with single-source verification defaults across every major chain. Chainlink community manager Zach Rynes also accused LayerZero of throwing Kelp under the bus for trusting a setup that LayerZero itself supported. In response to the incident, LayerZero has said it will no longer sign messages for any application running a single-verifier setup, forcing a protocol-wide migration. Kelp DAO has confirmed that it operated on LayerZero infrastructure since January 2024 and maintained close communication with the LayerZero team, and has called for a shared and accurate account of what happened to make the right fixes together.