A precise exploit against Kelp DAO's cross-chain bridge has left nearly $300 million in restaked tokens stranded across more than 20 blockchains. The attacker drained 116,500 rsETH (restaked ether) from Kelp's LayerZero-powered bridge at 17:35 UTC on Saturday, worth roughly $292 million at current prices and representing about 18% of rsETH's 630,000 token circulating supply tracked by CoinGecko.
How the Attack Worked: Fake LayerZero Messages Freed the Tokens
LayerZero is a cross-chain messaging layer that lets different blockchains send verified instructions to each other. Kelp DAO is a liquid restaking protocol that routes user-deposited ETH through EigenLayer to earn extra yield on top of standard Ethereum staking rewards, issuing rsETH as a tradeable receipt. The bridge that was drained held the rsETH reserve backing wrapped versions of the token deployed on more than 20 other networks, including Base, Arbitrum, Linea, Blast, Mantle and Scroll. The attacker tricked LayerZero's messaging layer into believing a valid instruction had arrived from another network, triggering Kelp's bridge to release 116,500 rsETH to an attacker-controlled address.
Kelp's emergency pauser multisig froze the protocol's core contracts 46 minutes after the successful drain, at 18:21 UTC. Two follow-up attempts at 18:26 and 18:28 UTC both reverted, each carrying the same LayerZero packet attempting another 40,000 rsETH drain worth roughly $100 million.
Contagion Spreads: Aave, Lido, Ethena Move Quickly
With that reserve drained, holders on non-Ethereum deployments now face the question of whether their tokens have anything underneath them, creating a feedback loop where panic redemptions on L2s pressure the unaffected Ethereum supply, potentially forcing Kelp to unwind restaking positions to honor withdrawals. Aave froze rsETH markets on V3 and V4 within hours, with founder Stani Kulechov affirming the exploit was external and Aave's contracts were not compromised. AAVE fell about 10% as the market priced potential bad debt. SparkLend and Fluid froze their rsETH markets. Lido Finance paused further deposits into its earnETH product (which carries rsETH exposure), clarifying that stETH and wstETH are unaffected and the core Lido staking protocol has no involvement. Ethena temporarily paused its LayerZero OFT bridges from Ethereum mainnet as a precaution, saying it has no rsETH exposure and remains more than 101% overcollateralized; the pause lasted roughly six hours while the root cause is identified.
Kelp, a product under the KernelDAO umbrella, acknowledged the incident nearly three hours after the drain in its first public X post at 20:10 UTC. The protocol said it was investigating with LayerZero, Unichain, its auditors and outside security specialists. It has not disclosed how the exploit bypassed the bridge's validation logic.
2026's Biggest DeFi Exploit: $292M Shockwave
Whether rsETH holds peg through the weekend depends on how much of the cross-chain float tries to redeem into ETH on Ethereum and whether Kelp can recover any portion of the stolen funds before the Tornado Cash trail goes cold. The hack lands in an unusually hostile stretch for DeFi. Solana-based perpetuals protocol Drift was drained of about $285 million on April 1 in an attack later linked to North Korea-affiliated actors, and at least a dozen smaller protocols have been exploited in the weeks since, including CoW Swap, Zerion, Rhea Finance and Silo Finance. Kelp's $292 million loss is now the largest DeFi exploit of 2026, overtaking Drift by a few million dollars.