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

A significant exploit has occurred in the DeFi space, with a cross-chain bridge being drained of nearly 18% of the circulating supply of restaked ether tokens, worth around $292 million. The attack, which took place on Saturday at 17:35 UTC, targeted Kelp DAO's LayerZero-powered bridge, resulting in the theft of 116,500 rsETH. This has triggered a series of emergency measures, including the freezing of contracts across multiple platforms, to mitigate the damage. The stolen funds were held in a reserve backing wrapped versions of the token on over 20 other blockchains. The attacker manipulated LayerZero's cross-chain messaging layer to release the funds to an attacker-controlled address. Kelp DAO's emergency response included freezing core contracts, but not before two follow-up attempts were made to drain an additional 40,000 rsETH. The incident has raised concerns about the potential for panic redemptions on layer 2 blockchains, which could pressure the unaffected Ethereum supply and force Kelp to unwind restaking positions. Several platforms, including Aave, SparkLend, and Fluid, have frozen their rsETH markets, while Lido Finance has paused further deposits into its earnETH product. The incident is still unfolding, with Kelp DAO investigating the exploit and working to recover the stolen funds.