Kelp DAO suffered a $290 million exploit and is attributing the loss to LayerZero's default security settings rather than flaws in its own code. The protocol claims the out-of-the-box configuration created the vulnerability that attackers exploited. The Block confirmed the exploit and significant losses, though the precise technical breakdown remains disputed.
A $290 million loss is large enough to rattle confidence across the cross-chain bridging sector, directly pressuring LayerZero's ecosystem and any protocols built on top of it. If the blame lands on LayerZero's defaults, every project using LayerZero without custom security configurations is now a potential risk flag — that's a wide blast radius across DeFi. Liquid restaking tokens and cross-chain yield protocols face heightened redemption pressure as users reassess counterparty risk.
Ongoing: LayerZero's official response and any published post-mortem. Watch for Kelp DAO governance votes on reimbursement or recovery plans. Monitor LayerZero-integrated protocol TVL (total value locked) on DeFiLlama for signs of capital flight in the coming 48-72 hours.
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