Major Crypto Heist: $292 Million Stolen from Kelp DAO, Leaving 20 Blockchains Exposed

A significant breach has occurred in the DeFi space, with an attacker successfully draining 116,500 rsETH, equivalent to around 18% of the token's circulating supply, from Kelp DAO's LayerZero-powered bridge. The incident, which took place on Saturday at 17:35 UTC, has triggered a wave of emergency responses across the ecosystem. The stolen funds, valued at roughly $292 million, were held in a bridge that supported wrapped versions of rsETH across over 20 blockchain networks. The attacker exploited LayerZero's cross-chain messaging layer by tricking it into releasing the rsETH to an attacker-controlled address. In response, Kelp DAO's emergency pauser multisig froze the protocol's core contracts 46 minutes after the attack. However, two subsequent attempts to drain an additional 40,000 rsETH were thwarted. The incident has raised concerns among holders of wrapped rsETH tokens on non-Ethereum blockchains, who are now uncertain about the value of their holdings. This has created a potential feedback loop where panicked redemptions could pressure the unaffected Ethereum supply, forcing Kelp to unwind its restaking positions to honor withdrawals. The fallout from the exploit has been widespread, with Aave, SparkLend, and Fluid freezing their rsETH markets, and AAVE's price plummeting by around 10%. Lido Finance has also paused deposits into its earnETH product due to its exposure to rsETH. Ethena, a stablecoin issuer, has temporarily paused its LayerZero OFT bridges as a precautionary measure. Kelp DAO has acknowledged the incident and is investigating the matter with LayerZero, Unichain, and outside security specialists. The recovery of the stolen funds and the maintenance of rsETH's peg will be crucial in determining the magnitude of the damage. This incident is the latest in a series of DeFi exploits, including the recent hack of Solana-based perpetuals protocol Drift, which lost around $285 million.