Hacker Drains $292 Million from Kelp DAO, Leaving 20 Blockchains with Stranded Wrapped Ether

In a devastating breach, a hacker has exploited Kelp DAO's LayerZero-powered bridge, draining 116,500 rsETH, equivalent to roughly $292 million and approximately 18% of the token's circulating supply. The attack, which occurred on Saturday at 17:35 UTC, has triggered a cascade of emergency measures across the DeFi landscape, including freezes on Aave, SparkLend, and Fluid. The hacker manipulated LayerZero's cross-chain messaging layer, deceiving it into releasing the rsETH to an attacker-controlled address. The breach has significant implications, as the drained rsETH was the reserve backing wrapped versions of the token on over 20 blockchains, including Base, Arbitrum, and Linea. With the reserve depleted, holders of wrapped tokens on these networks face uncertainty about the value of their assets, potentially sparking a wave of panic redemptions. The fallout has already seen AAVE's price plummet by 10%, while Lido Finance has paused deposits into its earnETH product and Ethena has temporarily halted its LayerZero OFT bridges as a precaution. Kelp DAO, a product under the KernelDAO umbrella, has acknowledged the incident and is investigating the breach with LayerZero, Unichain, and external security experts. The attack marks the largest DeFi exploit of 2026, surpassing the $285 million drained from Solana-based perpetuals protocol Drift in April.