Kelp DAO Alleges LayerZero's Default Settings Led to $290 Million Disaster

A recent $290 million crypto disaster has sparked a blame game between Kelp DAO and LayerZero. Kelp DAO is pushing back against LayerZero's post-mortem of the incident, which faults Kelp for ignoring warnings about its single-verifier setup. However, Kelp claims that the compromised verifier was actually part of LayerZero's own infrastructure and that the setup was the default configuration provided by LayerZero. The incident occurred when 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 to check transactions. Kelp alleges that the attackers compromised two of LayerZero's own servers and then flooded the backup servers with junk traffic to force LayerZero's verifier onto the compromised ones. Kelp disputes LayerZero's claim that it 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 framing of the incident, 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.