Kelp DAO Ditches LayerZero for Chainlink: A Tale of Crypto Chaos and Blaming Games

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Oh, what a tangled web we weave when first we practice to deceive! Kelp DAO, in a fit of crypto-panic, has decided to pack its bags and move its rsETH to Chainlink’s Cross-Chain Interoperability Protocol. Why, you ask? Well, after a cheeky little $292 million bridge exploit in April, they’ve had quite the falling out with LayerZero. Tsk, tsk, such drama in the blockchain ballroom!

  • Kelp DAO is scurrying to Chainlink CCIP faster than a cockroach at a picnic, all thanks to that pesky $292 million exploit.
  • LayerZero, with a huff and a puff, denies Kelp’s claims, insisting rsETH was manually switched to a 1-of-1 setup. Oh, the audacity!
  • Aave is in a legal tussle over frozen ETH tied to the rsETH fiasco. Because, of course, nothing says “crypto” like a good old-fashioned court battle.

Kelp DAO, with a straight face, claims this move to Chainlink CCIP is all about beefing up rsETH’s security. Apparently, 116,500 rsETH tokens took a little unauthorized vacation on April 18, courtesy of some clever hackers. Those tokens then waltzed into Aave v3, where they were used as collateral to borrow wrapped Ether. Naughty, naughty!

“After the recent LayerZero exploit, we are taking steps to ensure rsETH is fully secure, which is why we are migrating to Chainlink CCIP,” Kelp DAO chirped in an X post. Because nothing says “secure” like a mid-crisis move, right?

This switcheroo means rsETH is bidding farewell to LayerZero’s OFT standard and cozying up to Chainlink’s Cross-Chain Token standard. It’s like breaking up with your toxic ex and finding a new, hopefully less exploitable, partner.

The attack, one of the juiciest DeFi exploits of the year, sent shockwaves through lending markets. Stolen rsETH sauntered into Aave as collateral, and before you could say “blockchain,” parts of the related funds were frozen. Chaos, thy name is crypto!

Kelp DAO Points the Finger at LayerZero’s Security Warnings

Kelp DAO, with a wagging finger, claims LayerZero gave the green light to the 1-of-1 verifier setup that LayerZero later blamed for the exploit. Apparently, Kelp had been using LayerZero’s infrastructure since January 2024, and they were practically besties, with an open channel and everything.

The protocol insists the DVN setup was discussed multiple times during integration talks. According to Kelp, these configurations were “confirmed as secure at that time.” Oh, the irony of it all!

Kelp also argues that the 1-of-1 setup wasn’t exactly a rare gem. They cite Dune Analytics data showing nearly half of LayerZero users had a single DVN configuration. This, they say, raises eyebrows about whether the risk was made clear before the hack. Hmm, smells like a blame game to me!

The team even trotted out screenshots of Telegram exchanges, claiming they prove LayerZero’s awareness of the setup. But CoinDesk, ever the skeptic, couldn’t verify these screenshots. Shocking, I know!

LayerZero CEO Fires Back at Kelp’s Claims

LayerZero’s co-founder and CEO, Bryan Pellegrino, wasn’t having any of it. In a snappy reply on X, he called a “ton” of Kelp’s claims “just completely untrue.” Oh, the drama!

Pellegrino insisted Kelp initially used LayerZero’s default multi-DVN setup but later switched to the 1-of-1 configuration. He huffed that this setup was not recommended for production use. Tsk, tsk, Kelp, didn’t you read the fine print?

“The defaults Kelp is referencing in their screenshot were multiDVN or DeadDVN,” Pellegrino said. He added that rsETH was first configured with LayerZero Labs and Google under a multi-DVN model. Fancy company, Kelp!

LayerZero has since sworn off approving cross-chain messages for apps using a single verifier. They’re also herding protocols using that setup into multi-DVN configurations. Pellegrino promises a full postmortem from external security firms is on the way. Can’t wait for that popcorn moment!

Aave Battles to Free Frozen ETH

The rsETH exploit has spilled into the courtroom. According to crypto.news, Aave LLC filed an emergency motion in New York on May 4 to lift a restraining notice served on Arbitrum DAO. The notice aims to block the transfer of ETH linked to the April 18 rsETH incident. Because nothing says “crypto” like a legal showdown!

The filing involves about $71 million in frozen ETH. Gerstein Harrow LLP claims the funds could help settle unpaid judgments tied to alleged North Korea-linked crypto theft. Aave, naturally, disputes this, arguing that stolen assets don’t magically become North Korea’s property just because an alleged attacker held them briefly. Fair point!

Aave also pointed out that no court has ruled that North Korea, Lazarus Group, or any related party carried out the hack. The protocol insists the frozen assets belong to users affected by the exploit. Poor things, caught in the crossfire!

Arbitrum Security Council froze 30,765.6675 ETH on April 21. Aave said the funds were moved to a designated address to support rsETH backing and help affected users recover. Because, you know, it’s all about the users… until it’s not.

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2026-05-06 07:45