Kelp DAO Disputes LayerZero's Claims Over $290 Million Exploit

A recent crypto controversy 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 ignored repeated warnings to move away from a single-verifier setup, which was allegedly compromised in a sophisticated state-sponsored attack. The liquid restaking protocol claims that the compromised verifier was actually part of LayerZero's own infrastructure, and that the setup it was faulted for running was LayerZero's default configuration. The incident has raised questions about the security of cross-chain messaging and the responsibility of infrastructure providers. Kelp is a liquid restaking protocol that takes user-deposited ether and issues a receipt token, rsETH, in exchange. LayerZero is the cross-chain messaging infrastructure that moves rsETH between blockchains, using entities called DVNs to verify transactions. On Saturday, attackers drained 116,500 rsETH, worth about $290 million, from Kelp's LayerZero-powered bridge by poisoning the servers that LayerZero's verifier relied on. The source claimed that all of the infrastructure involved was built and run by LayerZero, not Kelp. The incident has sparked a debate about the security of cross-chain messaging and the role of infrastructure providers in ensuring the safety of user funds. Security researchers have also weighed in, with some arguing that LayerZero's default settings and infrastructure were the root cause of the issue. Yearn Finance core team developer Artem K posted a technical review of LayerZero's public deployment code, noting that the 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. 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.