Massive $292 Million Crypto Heist Hits Kelp DAO, Leaving 20 Blockchains Exposed

A catastrophic breach of a cross-chain bridge has led to the theft of nearly 18% of the circulating supply of restaked ether tokens, sparking a chain reaction of emergency measures across the DeFi ecosystem. On Saturday, at 17:35 UTC, an attacker successfully drained 116,500 rsETH from Kelp DAO's LayerZero-powered bridge, valued at around $292 million at current prices. The exploited bridge held the rsETH reserve that backed wrapped versions of the token on over 20 other blockchains. The attacker manipulated LayerZero's cross-chain messaging layer into releasing the funds to a controlled address. In response, Kelp's emergency pauser multisig froze the protocol's core contracts 46 minutes later, at 18:21 UTC, thwarting two subsequent attempts to drain an additional 40,000 rsETH. The breach has far-reaching implications, with holders of wrapped rsETH tokens on non-Ethereum blockchains facing uncertainty about the value of their assets. This has created a ripple effect, with panic redemptions on layer 2 blockchains potentially forcing Kelp to unwind its restaking positions to honor withdrawals. The incident has prompted several DeFi platforms, including Aave, SparkLend, and Fluid, to freeze their rsETH markets, while Lido Finance has paused further deposits into its earnETH product. The situation is still unfolding, with the fate of rsETH's peg hanging in the balance, as the market waits to see if Kelp can recover any of the stolen funds and contain the damage.