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

A recent exploit resulting in a $290 million loss has led to a dispute between Kelp DAO and LayerZero. Kelp DAO plans to contest LayerZero's claims that it ignored warnings about its single-verifier setup. Instead, Kelp DAO asserts that the compromised verifier was part of LayerZero's own infrastructure and that the setup was based on LayerZero's default onboarding configuration. 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 DAO claims that all of the infrastructure involved was 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, pointing out that LayerZero's own quickstart guide and default GitHub configuration recommend a 1/1 DVN setup. Security researchers have also questioned LayerZero's isolated framing, which pinned the blame on Kelp. 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 LayerZero itself supported. Kelp DAO confirmed that the 1-of-1 DVN setup at the center of the incident reflects LayerZero’s documented default configuration and stated that it has operated on LayerZero infrastructure since January 2024, maintaining close communication with the LayerZero team.