Kelp DAO rsETH Exploit Hits $292M

Kelp DAO rsETH exploited for $292 million

An attacker drained 116,500 rsETH worth approximately $292 million from Kelp DAO's LayerZero-powered bridge on Saturday, representing about 18% of the restaked ether token's circulating supply. The hack marks 2026's largest DeFi exploit, surpassing the recent Drift's $285 million loss, and tricked the cross-chain messaging layer into releasing funds to an attacker-controlled address, stranding wrapped ether reserves across more than 20 networks including Base, Arbitrum, and Blast. The contagion spread rapidly through DeFi. Aave, SparkLend, and Fluid froze their rsETH markets within hours. Lido paused deposits into its earnETH product, while Ethena temporarily halted LayerZero bridges as a precaution. Kelp's emergency pauser multisig froze core contracts 46 minutes after the drain, blocking two follow-up attempts worth another $100 million.

Now KelpDAO, LayerZero and AAVE are arguing how to split the loss, while KelpDAO clearly cannot afford the whole loss, AAVE clearly implied they should not share the loss https://x.com/aave/status/2045944827510939696 hence it seems inevitable rsETH holders / AAVE depositors will share the loss.

At this point, when yield is low and risk is high, DeFi yield farming is not easy money like 2025. Hence DeFi total TVL dropped by $13 billion.

Drift announces user recovery and relaunch

Drift Protocol announced a collaboration with Tether and other partners totaling up to nearly $150 million to support its relaunch with USDT at the center. The funding package includes a $100 million revenue-linked credit facility, an ecosystem grant, and loans to market makers, all designed to fund a dedicated user recovery pool.

However, it's worth noting that much of this funding consists of credit facilities rather than outright capital. The $100 million credit line is protocol revenue-linked, meaning borrowing capacity unlocks only when protocol revenue exceeds certain thresholds—likely requiring DRIFT tokens as collateral. In practice, deployable recovery capital could fall far short of the headline $150 million figure. The structure ties user compensation to Drift's future performance, raising concerns about how quickly and completely affected users will be made whole.

See announcement: https://x.com/DriftProtocol/status/2044765309454721294

RaveDAO pump and dump amid market manipulation concerns

RAVE token pumped over 100x from $0.25 in beginning of the month, to $28 briefly entering the top 20 cryptocurrencies by market capitalization, then in less than 24 hours of hitting ATH crashed to less than $1, now at around $0.5.

The textbook style of pump and dump are brutal, as the muniplaters are controlling the spot price from Binance Alpha to drain funding fees and liquidations from their trading counterparties in perpetual swap market. On-chain data had revealed over 95% token supply concentrated in a few wallets, classic manipulation red flags that critics warned about.

Now it's time to see if Binance is really serious about their recently announced market making rules, or they actually prioritize trading fee revenue over user protection.

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