Kelp DAO Disputes LayerZero's Claims Regarding $290 Million Disaster

A recent cryptocurrency exploit has sparked a heated debate between Kelp DAO and LayerZero, with Kelp set to contest LayerZero's post-mortem analysis of the $290 million disaster. According to a source familiar with the matter, Kelp plans to argue that the compromised verifier was actually part of LayerZero's own infrastructure, and that the setup in question was LayerZero's default configuration. This development has led to a wider discussion about responsibility and security in the cryptocurrency space. Kelp, a liquid restaking protocol, takes user-deposited ether and routes it through a yield-generating system called EigenLayer, issuing a receipt token called rsETH in exchange. LayerZero, on the other hand, provides the cross-chain messaging infrastructure that moves rsETH between blockchains, using entities called decentralized verifier networks (DVNs) to verify the validity of cross-chain transfers. The exploit in question 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 claims that the compromised DVN was LayerZero's own infrastructure, and that the attackers compromised two of LayerZero's servers, then flooded the backup servers with junk traffic to force LayerZero's verifier onto the compromised ones. The source also contested LayerZero's claim that Kelp chose a 1-of-1 DVN setup despite recommendations to configure multi-DVN redundancy, arguing that LayerZero's own quickstart guide and default GitHub configuration point to a 1/1 DVN setup, and that 40% of protocols on LayerZero are currently using the same configuration. Security researchers have also weighed in on the issue, with some arguing that LayerZero is deflecting responsibility for its own compromised infrastructure. Yearn Finance core team developer Artem K, also known as @banteg on X, 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 and throwing Kelp under the bus for trusting a setup that LayerZero itself supported. In response to the incident, 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 called for a shared and accurate account of what happened in order to make the necessary fixes.