After KelpDAO suffered a breach, rsETH plunged to $1,723 and lost parity with ETH, prompting Aave and others to tighten risk controls. The incident highlights bridge security as a core part of DeFi collateral management.
Following a suspected hacker breach tied to KelpDAO, rsETH fell sharply below ETH, prompting Aave and others to tighten risk controls. The incident highlights bridge security as a core part of collateral risk management in DeFi.
Llamarisk reported that a KelpDAO rsETH bridge exploit allowed an attacker to extract 116,500 rsETH without burning source-chain tokens, then use most of it on Aave. Depending on loss allocation, Aave could face $123.7 million to $230.1 million in bad debt.
A Llamarisk incident report says a KelpDAO rsETH bridge exploit allowed 116,500 rsETH to be extracted on Ethereum without a source-chain burn, exposing Aave V3 markets to potential bad debt of $123.7 million to $230.1 million.
A Llamarisk incident report says a KelpDAO rsETH bridge exploit allowed an attacker to extract 116,500 rsETH and use much of it as collateral on Aave. While Aave’s contracts were not compromised, the protocol now faces estimated bad debt of $123.7 million to $230.1 million depending on loss allocation.
A bridge exploit of Kelp's Layerzero V2 rsETH route on April 18, 2026, drained 116,500 rsETH, potentially causing $123.7M-$230.1M bad debt across 7 Aave V3 markets. Llamarisk's report details two loss socialization scenarios, while Aave DAO holds $181M treasury and has secured indicative recovery commitments.
A report by Llamarisk and Aave service providers reveals a bridge exploit on Kelp's LayerZero V2 route, minting 116,500 unbacked rsETH and leaving Aave V3 markets facing $123.7M-$230.1M in potential bad debt. Freezes and rate adjustments are enacted, with recovery commitments in place.
Ink Chain's TVL dropped 33% in a week due to the KelpDAO rsETH exploit. Its concentrated exposure through Tydro lending markets amplified outflows, highlighting the fragility of newer L2 ecosystems reliant on short-term capital and narrow DeFi primitives.
