Major Crypto Heist: $292 Million Stolen from Kelp DAO, Leaving Wrapped Ether Stranded Across 20 Blockchains

A devastating exploit has struck the cryptocurrency world, with a cross-chain bridge being drained of nearly a fifth of the circulating supply of restaked ether tokens, sparking a wave of emergency measures across the DeFi landscape. On Saturday, at 17:35 UTC, an attacker successfully siphoned off 116,500 rsETH, valued at around $292 million, from Kelp DAO's LayerZero-powered bridge, which represents approximately 18% of the token's total circulating supply. The breach occurred when the attacker deceived LayerZero's cross-chain messaging layer into executing a fake instruction, prompting Kelp's bridge to release the stolen 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 prevent further damage. However, two subsequent attempts to drain an additional 40,000 rsETH, worth roughly $100 million, were thwarted. The stolen rsETH was part of a reserve backing wrapped versions of the token deployed across more than 20 networks, including Base, Arbitrum, and Scroll, which now face uncertainty over the validity of their tokens. As a result, holders on non-Ethereum deployments are left wondering if their tokens have any underlying value, creating a potential feedback loop of panic redemptions that could pressure the unaffected Ethereum supply and force Kelp to unwind restaking positions to honor withdrawals. The ripple effects of the exploit have already been felt, with Aave, SparkLend, and Fluid freezing their rsETH markets, while Lido Finance has paused further deposits into its earnETH product due to its exposure to rsETH. The incident has also led to a temporary pause of Ethena's LayerZero OFT bridges from Ethereum mainnet as a precautionary measure. As the DeFi community grapples with the aftermath of the attack, the future of rsETH's peg remains uncertain, depending on the extent of cross-chain redemptions and Kelp's ability to recover the stolen funds. This major heist has dealt a significant blow to the DeFi sector, which has already been reeling from a series of smaller exploits in recent weeks, including the $285 million drain of Solana-based perpetuals protocol Drift on April 1.