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

A recent cyber attack has drained a substantial amount of restaked ether from Kelp DAO's LayerZero-powered bridge, sparking a wave of emergency responses across the DeFi landscape. On Saturday at 17:35 UTC, an attacker exploited the bridge, siphoning off 116,500 rsETH, which accounts for roughly 18% of the token's circulating supply. This significant breach has left the DeFi community reeling, with the stolen funds valued at approximately $292 million at current prices. The attack has also raised concerns about the security of wrapped versions of the token deployed across more than 20 other blockchains. The attacker managed to trick LayerZero's cross-chain messaging layer into releasing the rsETH to an attacker-controlled address. In response, Kelp's emergency pauser multisig froze the protocol's core contracts 46 minutes after the attack. However, two subsequent attempts to drain an additional 40,000 rsETH were successfully reverted. The implications of this attack are far-reaching, with holders of rsETH on non-Ethereum deployments facing uncertainty about the value of their tokens. This has created a ripple effect, with panic redemptions on layer 2 blockchains potentially forcing Kelp to unwind restaking positions to honor withdrawals. The fallout from the attack has been swift, with Aave, SparkLend, and Fluid freezing their rsETH markets. Lido Finance has also paused further deposits into its earnETH product, which carries rsETH exposure. The incident serves as a stark reminder of the risks associated with DeFi and the importance of robust security measures to prevent such attacks. As the DeFi community continues to grapple with the aftermath of this breach, the coming days will be crucial in determining the fate of rsETH and the broader DeFi ecosystem.