Crypto's Biggest Heist of 2026: Kelp DAO Loses $292 Million to Hackers

A devastating hack has struck the Kelp DAO, a liquid restaking protocol, with the attacker making off with 116,500 restaked ether (rsETH) tokens, equivalent to roughly $292 million, from the protocol's LayerZero-powered bridge. The breach, which occurred on Saturday at 17:35 UTC, has sent shockwaves throughout the DeFi ecosystem, with several major players taking swift action to mitigate potential damage. The stolen tokens represent about 18% of the total circulating supply of rsETH, which is currently tracked by CoinGecko at 630,000 tokens. The attacker exploited a vulnerability in LayerZero's cross-chain messaging layer, tricking the system into releasing the rsETH tokens to an attacker-controlled address. In response, Kelp DAO's emergency pauser multisig froze the protocol's core contracts 46 minutes after the attack, but not before the attacker attempted two further drain attempts, each worth approximately $100 million. The fallout from the hack is being felt across more than 20 networks, including Base, Arbitrum, and Scroll, where the rsETH token is deployed. With the reserve backing wrapped versions of the token on these networks now depleted, holders are facing uncertainty over the value of their tokens, leading to a potential feedback loop of panic redemptions and pressure on the unaffected Ethereum supply. Several prominent DeFi platforms, including Aave, SparkLend, and Fluid, have frozen their rsETH markets in response to the hack, 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 in Ethena's LayerZero OFT bridges from the Ethereum mainnet as a precautionary measure. As the investigation into the hack continues, the fate of the stolen funds and the future of the rsETH token hang in the balance, with the potential for further contagion and instability in the DeFi market.