2026's Largest Crypto Heist: Kelp DAO Loses $292 Million in rsETH Due to Exploit

A significant breach occurred on Saturday when an attacker exploited a vulnerability in Kelp DAO's cross-chain bridge, resulting in the theft of 116,500 rsETH, valued at approximately $292 million. This incident has sent shockwaves throughout the DeFi ecosystem, with Kelp DAO's liquid restaking protocol being a critical component. The attacker manipulated LayerZero's cross-chain messaging layer, deceiving it into releasing the stolen rsETH to an attacker-controlled address. In response, Kelp's emergency pauser multisig froze the protocol's core contracts, but not before the attacker made two follow-up attempts to drain an additional 40,000 rsETH. The stolen rsETH was part of the reserve backing wrapped versions of the token on over 20 networks, including Base, Arbitrum, and Scroll. As a result, holders of wrapped rsETH on non-Ethereum deployments are now uncertain about the value of their tokens, potentially triggering a wave of panic redemptions that could pressure the unaffected Ethereum supply. This has led to a chain reaction, with Aave, SparkLend, and Fluid freezing their rsETH markets, while Lido Finance has paused further deposits into its earnETH product. The incident has also prompted Ethena to temporarily pause its LayerZero OFT bridges as a precaution. Kelp DAO has acknowledged the incident and is investigating the matter with LayerZero, Unichain, and outside security specialists. The repercussions of this exploit are still unfolding, with the potential for further contagion and instability in the DeFi market.