Kelp DAO exploit drains $292 million, wraps ether across 20 chains

Kelp DAO exploit shakes DeFi ecosystem

An attacker emptied 116,500 rsETH – about ↓ 18% of the token’s circulating supply – from Kelp’s LayerZero‑powered bridge on Saturday. The breach left ↓ $292 million stranded as wrapped ether on more than 20 blockchains, prompting emergency freezes at Aave, SparkLend, Fluid and Upshift.

“The speed of the freeze response was unprecedented,” said a senior analyst at Reuters.

Kelp’s governance forum scrambled to assess the damage while developers traced the exploit to a mis‑configured cross‑chain relay.

Impact on broader crypto markets

Prices of major stablecoins dipped marginally, and liquidity providers on related protocols reported sudden outflows. Analysts at Bloomberg flagged the event as the largest single‑chain loss of 2026, warning that similar vulnerabilities could surface as LayerZero adoption expands. The incident also revives debate over the security of wrapped assets and the need for stricter audit standards across multi‑chain bridges.

Dispatch from: Lyra Valance

Digital Assets & Web3 Insider