DeFi protocol Kelp DAO is cutting ties with LayerZero after last month's major bridge hack and moving to Chainlink as its cross-chain infrastructure provider. On April 18, attackers allegedly linked to the North Korean Lazarus Group drained approximately 116,500 rsETH through Kelp DAO's LayerZero-based bridge. Total losses amounted to $292 million.

The Dispute Over LayerZero's Security Model

At the center of the criticism is the so-called 1-of-1 configuration of the Decentralized Verifier Network (DVN), under which a single verifier was sufficient to confirm cross-chain transactions. LayerZero maintains that it warned Kelp DAO about the risks of such a setup.

Kelp DAO and independent observers push back, arguing that this very configuration had long been the standard recommendation during onboarding. An analysis cited by Kelp found that at the time of the attack, 47% of approximately 2,665 LayerZero applications were running the same single-verifier configuration.

LayerZero has since announced it will no longer support single-verifier setups. Chainlink's Cross-Chain Interoperability Protocol (CCIP), by contrast, relies on decentralized oracle networks in which at least 16 independent node operators validate cross-chain transactions.

Following the migration to Chainlink, rsETH will adopt Chainlink's Cross-Chain Token Standard. Kelp DAO stated that the move to Chainlink CCIP directly addresses the architectural vulnerability that was exploited in the attack. Chainlink reports that its infrastructure has secured more than $30 trillion in cross-chain transaction volume to date.

DeFi United Raises Over $300 Million

In the wake of the attack, the DeFi United initiative was launched to restore rsETH's backing. LayerZero contributed around 10,000 ETH — comprising a 5,000 ETH donation and a further 5,000 ETH loan to Aave. In total, more than $300 million in crypto assets has been assembled.

Further legal complications have emerged in the form of a lawsuit filed by alleged victims of previous North Korean hacks, who are seeking to secure 30,766 ETH frozen by the Arbitrum DAO Security Council following the Kelp exploit. Arbitrum DAO had voted to release the funds to DeFi United. On Monday, Aave filed an emergency motion to dismiss the lawsuit and lift the injunction against the frozen assets.

Meanwhile, Strategy founder Michael Saylor has sparked widespread debate with comments about potential future Bitcoin sales.