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

A recent $290 million exploit has sparked a heated debate between Kelp DAO and LayerZero, with each party blaming the other for the massive loss. Kelp DAO, a liquid restaking protocol, claims that the compromised verifier was part of LayerZero's own infrastructure and that the setup it was criticized for using was actually LayerZero's default configuration. According to a source familiar with the matter, Kelp DAO is set to dispute LayerZero's post-mortem of the exploit, which blames Kelp for ignoring repeated warnings to move away from a single-verifier setup. 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 argues that the attackers compromised two of LayerZero's own servers, which were used to verify cross-chain transactions, and then flooded the backup servers with junk traffic to force LayerZero's verifier onto the compromised ones. The source claims that all of the infrastructure involved was built and run by LayerZero, not Kelp. Furthermore, Kelp DAO contests 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. In fact, 40% of protocols on LayerZero are currently using the same configuration. Security researchers have also questioned LayerZero's isolated framing, which pinned the blame on Kelp, with some accusing LayerZero of 'deflecting responsibility' for its own compromised infrastructure. 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 alleged that LayerZero was 'deflecting responsibility' for its own compromised infrastructure and accused the company of throwing Kelp under the bus for trusting a setup LayerZero itself supported. In response to the incident, LayerZero has said 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 to make the necessary fixes. The team behind LayerZero is working to 'harden security across every possible vector for applications' and has promised to publish more updates soon.