Kelp DAO Suffers $292 Million Exploit, Triggering DeFi Market Freeze
2026's biggest crypto exploit: Kelp DAO hit for $292 million with wrapped ether stranded across 20 chains
Coindesk
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Kelp DAO, a liquid restaking protocol, was exploited for $292 million when an attacker drained 116,500 rsETH from its LayerZero-powered bridge, representing 18% of the token's circulating supply. This incident has raised concerns about the backing of rsETH across multiple blockchains and led to emergency freezes by several DeFi protocols.
- 01Kelp DAO lost $292 million in the largest DeFi hack of 2026.
- 02The attacker drained 116,500 rsETH, about 18% of the circulating supply.
- 03Emergency freezes were implemented across several DeFi platforms including Aave and SparkLend.
- 04The exploit raises doubts about the stability of rsETH on multiple layer 2 networks.
- 05Kelp DAO is investigating the incident with security experts and has not disclosed how the exploit occurred.
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In a significant breach, Kelp DAO, a liquid restaking protocol, was exploited for $292 million on Saturday, with an attacker draining 116,500 rsETH (restaked ether) from its LayerZero-powered bridge. This amount represents approximately 18% of the total circulating supply of rsETH, which is tracked at 630,000 tokens. The attack has prompted emergency freezes across several decentralized finance (DeFi) platforms, including Aave and SparkLend, as concerns mount regarding the backing of rsETH across over 20 blockchains. The attacker manipulated LayerZero's cross-chain messaging to authorize the transfer of funds to an address they controlled, leading to a rapid response from Kelp DAO, which paused its core contracts just 46 minutes after the exploit. The fallout from this incident has put intense pressure on the stability of rsETH's peg and Kelp's ability to meet redemptions, as panic among token holders could lead to further instability. This breach marks the largest DeFi exploit of 2026, surpassing a previous attack on the Drift protocol. Kelp DAO is currently working with security specialists to investigate the exploit and determine how its validation logic was bypassed.
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The exploit has raised significant concerns about the stability and backing of rsETH, potentially leading to panic redemptions and further market instability.
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