Kelp DAO Suffers $292 Million Exploit: A DeFi Earthquake

DeFi News: Kelp DAO's Cross-Chain Bridge Drained of $292 Million. An attacker exploited a cross-chain bridge holding nearly 18% of the circulating supply of rsETH, a restaked ether token, resulting in a loss of approximately $292 million. The exploit occurred when an attacker tricked LayerZero's cross-chain messaging layer into releasing 116,500 rsETH to an attacker-controlled address. Kelp DAO, a liquid restaking protocol, paused its core contracts 46 minutes after the attack. Two follow-up attempts to drain an additional 40,000 rsETH were reverted. The incident highlights the evolving tactics of North Korea-linked hackers, who are increasingly targeting decentralized systems. The attack on Kelp DAO suggests that these hackers are no longer just exploiting bugs or using stolen credentials but are now manipulating the underlying assumptions of decentralized systems. In a related development, Aave, a lending protocol, was affected by the Kelp DAO hack, with the attacker depositing 89,567 rsETH as collateral and borrowing roughly $190 million in ETH and related assets. Aave has since frozen rsETH markets and set loan-to-value ratios to zero to contain the risk. Meanwhile, Coinbase has commissioned a report on the risks of quantum computing to the crypto industry. The report, authored by prominent cryptographers and academics, concludes that while current blockchains remain secure, the industry must begin preparing for the potential risks of quantum computing, which could potentially break widely used encryption in the future.