Traders Doubt Kelp Will Share $292 Million Exploit Losses Across the Board

Traders on Polymarket are betting against Kelp spreading the losses from the $292 million exploit to all rsETH holders, with only a 14% chance of such an outcome. The exploit, which drained approximately 116,500 rsETH from a LayerZero-powered bridge supporting over 20 blockchains, has left parts of the system undercollateralized. The concept of 'socializing the losses' implies that Kelp would redistribute the shortfall among all rsETH holders, including those on the Ethereum mainnet, rather than concentrating the losses among users and protocols directly tied to the compromised bridge. This approach has been seen in the past, such as in 2016 when Bitfinex mutualized losses after a $60 million hack. More recently, derivatives exchanges have used auto-deleveraging, where profitable positions are forcibly reduced to cover losses when insurance funds are depleted. However, Kelp's situation is more intricate due to the exploit's impact across multiple chains, leaving losses scattered among different user groups and platforms. As a result, any attempt to equalize losses would require complex coordination and accounting, making a system-wide redistribution both technically and politically challenging, which may explain the skepticism among Polymarket traders.