A liquid staking protocol called Kelp with a total locked value (TVL) of $1.57billion was abused on the 19th. In just minutes, $294m were lost.
KelpDAO Restaked ETH was severely compromised in the attack. According to Lookonchain the illegal actor minted 116.500 RSETH which equals $294 million and sold them as collateral for 106.467 ETH.
How did LayerZero play as a player in secret?
Kelp was only able to interrupt the protocol after 46 minutes. However, damage already done had been irreversible.
In fact, a more in-depth analysis of the exploit shed light on the fact that LayerZero—a cross-chain messaging layer—acted as a bridge. The wrongdoer could receive 116.500 rsETH by deluding LayerZero.
LayerZero’s token has been impacted. ZROIt too dropped by more than 22% over the last 24 hours, changing hands for $1.52. The price has dropped dramatically from $2 to $1.52 in just two days.
Additionally, the team at LayerZero came forward to inform the victims that they have been in “active remediation with the KelpDAO team.”
This attack had a multiplier effect, since a whale who held ZRO on Hyperliquid suffered a loss of $2.88 in liquidation. Although the whale holds its position, the loss is $750,000. This results in an overall 428.98million loss.
Impact and reactions on a wide scale
Since rsETH can be found on over 20 blockchains including Ethereum L2s, many in the crypto world are calling it the largest hack of 2026. This is because users would have immediately sold or redeemed their rsETH. Ethereum [ETH].
Many protocols have frozen their platforms in order to prevent further damage. Aave froze Aave v3 and Aave v4, as well as its token AAVE It was traded at $92.06.
As soon as this incident was brought to light, whales who were holding AAVE started dumping their token.
Even though Ethena [ENA] having ‘no exposure to the rsETH exploit,’ the team still paused their LayerZero OFT bridges from the Ethereum mainnet as an ‘abundance of caution.’
As a result, the token saw a small loss of about 3% in comparison to other coins. Lido Finance is no different. They also follow the same strategy.
The crypto-world was shaken by other attacks in the year 2026
Over the past 2 weeks, DeFi has been robbed of more than 600 million dollars across 10 different protocols. Recent ones include Rhea Finance Witnessing an 18:4 million dollar exploit tied to slippage.
Secondly, CoW Swap The front-end assault was a major problem. Drift Protocol Faced a drain of $285 millions Additionally, Zerion faced a $100K loss from the ‘internal company hot wallets,’ and the list goes on.
Together, they show the extent to which illicit actors have expanded their operations in and around cryptocurrency.
Final summary
- Kelp is ready to be harvested in 46 minutes.DAO quickly paused all activity in order to stop further damages.
- DeFi protocols paused all activities in their platforms, irrespective of any losses.
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Source: ambcrypto.com
