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

A catastrophic breach of a cross-chain bridge has led to the loss of nearly a fifth of the circulating supply of a restaked ether token, with the fallout spreading rapidly through the DeFi ecosystem. On Saturday, at 17:35 UTC, an attacker exploited Kelp DAO's LayerZero-powered bridge, draining 116,500 rsETH, valued at approximately $292 million, and representing about 18% of the token's total supply. The stolen funds were held in a bridge that backed wrapped versions of the token deployed across more than 20 blockchains, including Base, Arbitrum, and Scroll. 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 after the attack. However, two subsequent attempts to drain an additional 40,000 rsETH were thwarted. The exploit has created a crisis of confidence among holders of wrapped tokens on non-Ethereum networks, who are now uncertain whether their tokens are backed by the drained reserve. This has sparked a wave of panic redemptions, which may pressure the unaffected Ethereum supply and force Kelp to unwind its restaking positions to honor withdrawals. The incident has already had far-reaching consequences, with Aave, SparkLend, and Fluid freezing their rsETH markets, and AAVE's price plummeting by 10%. Lido Finance has also paused deposits into its earnETH product, which is exposed to rsETH, while Ethena has temporarily suspended its LayerZero OFT bridges as a precaution. Kelp DAO has acknowledged the incident and is investigating the exploit with LayerZero, Unichain, and outside security specialists. The fate of rsETH's peg now hangs in the balance, as the DeFi community waits to see whether Kelp can recover any of the stolen funds and restore confidence in the token.