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

A devastating breach occurred on Saturday, as an attacker successfully drained nearly 18% of the circulating supply of restaked ether (rsETH) from Kelp DAO's LayerZero-powered bridge. The stolen funds, worth around $292 million, were taken from a reserve that backed wrapped versions of the token on over 20 other blockchains, including Base, Arbitrum, and Scroll. The attack was made possible by exploiting LayerZero's cross-chain messaging layer, which allowed the attacker to trick the bridge into releasing the rsETH to a controlled address. In response, Kelp DAO's emergency pauser multisig froze the protocol's core contracts, and several DeFi platforms, such as Aave and SparkLend, have since frozen their rsETH markets. The incident has raised concerns about the potential for widespread contagion, as holders of wrapped ether on non-Ethereum deployments face uncertainty about the value of their tokens. The situation is being closely monitored, with many platforms taking precautionary measures to mitigate potential losses. As the investigation into the attack continues, the future of rsETH and the broader DeFi market remains uncertain.