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

A devastating cross-chain bridge hack has resulted in the theft of nearly a fifth of a restaked ether token's circulating supply, sparking widespread disruption throughout the DeFi ecosystem. On Saturday, at 17:35 UTC, an attacker successfully exploited Kelp DAO's LayerZero-powered bridge, siphoning off 116,500 rsETH, valued at roughly $292 million. This significant loss accounts for approximately 18% of the token's total circulating supply. The breach has left the rsETH reserve, which backs wrapped versions of the token on over 20 blockchains, severely depleted. LayerZero, a cross-chain messaging layer, was tricked into releasing the funds to an attacker-controlled address. In response, Kelp's emergency pauser multisig froze the protocol's core contracts 46 minutes later, at 18:21 UTC, to mitigate further damage. However, two subsequent attempts to drain an additional 40,000 rsETH were made, both of which were reverted. The attack has raised concerns among holders of rsETH on non-Ethereum deployments, as the depleted reserve backing wrapped versions on these networks has created uncertainty about the tokens' underlying value. This has led to a potential feedback loop, where panic redemptions on layer 2 blockchains may pressure the unaffected Ethereum supply, potentially forcing Kelp to unwind restaking positions to honor withdrawals. The fallout from the exploit has been swift, 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 precautionary measure. Kelp, which operates under the KernelDAO umbrella, has acknowledged the incident and is currently investigating the matter with LayerZero, Unichain, its auditors, and outside security specialists. The protocol has not disclosed the specifics of how the exploit bypassed the bridge's validation logic. As the DeFi community grapples with the aftermath of this significant exploit, the coming days will be crucial in determining whether rsETH can maintain its peg and if Kelp can recover any portion of the stolen funds.