Kelp DAO Disputes LayerZero's Account of $290 Million Disaster, Blames Default Settings

A recent cryptocurrency exploit has sparked a heated debate between Kelp DAO and LayerZero, with Kelp set to challenge LayerZero's post-mortem of the $290 million disaster. According to a source familiar with the matter, Kelp plans to argue that the compromised verifier was part of LayerZero's own infrastructure, not a third-party verifier, and that the setup was based on LayerZero's default configuration. The exploit 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 is a liquid restaking protocol that takes user-deposited ether, routes it through a yield-generating system called EigenLayer, 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 whether a cross-chain transfer is valid. The source claims that the DVN that was compromised was LayerZero's own infrastructure, built and run by LayerZero, not Kelp. The source also contested LayerZero's framing of the '1/1 configuration' as a fringe choice made against guidance, stating that LayerZero's own quickstart guide and default GitHub configuration point to a 1/1 DVN setup, which 40% of protocols on LayerZero are currently using. Security researchers have also questioned LayerZero's account, with one developer stating that the reference setup ships with single-source verification defaults across every major chain and leaves a public endpoint exposed that leaks the list of configured servers to anyone who queries it. The incident has sparked a debate about responsibility, with some accusing LayerZero of deflecting blame and throwing Kelp under the bus for trusting a setup that LayerZero itself supported.