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

A recent cryptocurrency incident has sparked a heated debate, 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 contest LayerZero's claim that it was to blame for the disaster due to its use of a single-verifier setup. The liquid restaking protocol asserts that the compromised verifier was actually part of LayerZero's own infrastructure and that the setup it was criticized for using was, in fact, LayerZero's default configuration. The incident has led to a significant loss of funds, with attackers draining 116,500 rsETH, worth approximately $290 million, from Kelp's LayerZero-powered bridge by compromising the servers that LayerZero's verifier relied on. Kelp claims that the attack was a sophisticated state-sponsored attack that targeted LayerZero's own servers, which were built and run by the cross-chain messaging firm. The source also disputed LayerZero's framing of the '1/1 configuration' as a fringe choice, stating that LayerZero's own quickstart guide and default GitHub configuration recommend this setup, which is currently used by 40% of protocols on the platform. Security researchers have also questioned LayerZero's account, with Yearn Finance core team developer Artem K noting that LayerZero's 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 in order to make the necessary fixes.