Kelp DAO Disputes LayerZero's Account of $290 Million Exploit, Claims Default Settings Were to Blame

A recent exploit resulting in the loss of $290 million has sparked a dispute between Kelp DAO and LayerZero, with Kelp set to challenge LayerZero's post-mortem analysis of the incident. According to a source familiar with the matter, Kelp plans to argue that the compromised verifier was not a third-party entity, but rather part of LayerZero's own infrastructure. Furthermore, Kelp claims that the setup in question, which has been criticized by LayerZero, was actually the default configuration provided by LayerZero. 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 contends that the compromised verifier was part of LayerZero's decentralized verifier network (DVN) and that the setup, which has been described as a '1/1 configuration,' was the default setup provided by LayerZero. This configuration means that only a single validator must sign off on a cross-chain message for the bridge to act on it, leaving the system with no second check to catch a compromised or forged instruction. Kelp argues that this setup was not a fringe choice made against guidance, but rather the default configuration provided by LayerZero. In fact, Kelp claims that 40% of protocols on LayerZero are currently using the same configuration. 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. Security researchers have also weighed in on the incident, with some arguing that LayerZero's post-mortem analysis was overly simplistic and failed to account for the complexities of the incident. As the situation continues to unfold, it remains to be seen how the dispute between Kelp DAO and LayerZero will be resolved and what implications this will have for the broader crypto industry.