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

A recent cryptocurrency incident has sparked a heated debate, with Kelp DAO and LayerZero pointing fingers at each other over a $290 million exploit. According to sources, Kelp DAO plans to challenge LayerZero's claims that it ignored warnings about its single-verifier setup. Instead, Kelp asserts that the compromised verifier was part of LayerZero's own infrastructure and that the setup in question was LayerZero's default configuration. 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. Kelp argues that the compromised servers were built and run by LayerZero, not by itself. 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. In fact, 40% of protocols on LayerZero are currently using the same configuration. Security researchers have also expressed skepticism over LayerZero's isolated framing, which pinned the blame on Kelp. Yearn Finance core team developer Artem K noted 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 LayerZero itself supported. As a result, 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 operated on LayerZero infrastructure since January 2024, maintaining close communication with the LayerZero team.