{"id":604908,"date":"2026-05-26T05:14:40","date_gmt":"2026-05-26T05:14:40","guid":{"rendered":"https:\/\/Blockchain.News\/news\/kelp-dao-restores-rseth-after-293m-hack"},"modified":"2026-05-26T05:14:40","modified_gmt":"2026-05-26T05:14:40","slug":"kelp-dao-restores-rseth-after-293m-hack-completes-recovery","status":"publish","type":"post","link":"https:\/\/e-bitco.in\/index.php\/2026\/05\/26\/kelp-dao-restores-rseth-after-293m-hack-completes-recovery\/","title":{"rendered":"Kelp DAO Restores rsETH After $293M Hack, Completes Recovery"},"content":{"rendered":"
\n

Iris Coleman<\/a> May 26, 2026 05:14<\/span> <\/p>\n

Kelp DAO fully restores rsETH backing after a $293M hack. Key recovery milestones and implications for Aave and DeFi.<\/p>\n

\"Kelp <\/a> <\/figure>\n

Kelp DAO has fully restored the backing for its liquid restaked token, rsETH, five weeks after a $293 million exploit compromised the protocol’s cross-chain bridge infrastructure. The incident, attributed to North Korea\u2019s Lazarus Group, caused significant disruption across the decentralized finance (DeFi<\/a>) ecosystem.<\/strong><\/p>\n

The final tranche of 20,373.7 rsETH was transferred on May 25 to the LayerZero smart contract responsible for managing the token\u2019s cross-chain activity. This marks the completion of Kelp DAO\u2019s recovery plan, which relied heavily on community and industry contributions. According to Kelp\u2019s post on X (formerly Twitter), rsETH mints, redemptions, and rewards operations have resumed normal functionality.<\/p>\n

The hack on April 18 exploited vulnerabilities in Kelp\u2019s LayerZero-powered bridge, enabling the fraudulent minting of 116,500 rsETH\u2014valued at approximately $292\u2013$300 million. The attack disrupted liquidity in DeFi markets, with Aave suffering particularly severe impacts as the attacker leveraged stolen rsETH as collateral. This resulted in $190 million in bad debt for Aave and catalyzed net outflows that halved its total value locked (TVL) from $26.4 billion to under $14 billion, according to DefiLlama data.<\/p>\n

Industry-Wide Recovery Efforts<\/h2>\n

In the wake of the exploit, Kelp DAO launched a comprehensive recovery initiative backed by over $300 million in pledges from DeFi protocols and organizations under the DeFi United banner. Notably, Arbitrum DAO approved a $70 million ETH release to aid in the effort. The first tranche of recovered rsETH\u201425,000 tokens\u2014was bridged on May 13, enabling withdrawals to reopen the following day.<\/p>\n

To address the root cause of the exploit, Kelp DAO is migrating its bridging infrastructure from LayerZero to Chainlink\u2019s Cross-Chain Interoperability Protocol (CCIP). Announced on May 6, the move aims to bolster cross-chain security and mitigate structural risks associated with low-quorum bridge configurations.<\/p>\n

Implications for Aave and Broader DeFi<\/h2>\n

Although Kelp DAO has successfully restored rsETH, Aave\u2019s TVL has yet to recover. Data from DefiLlama shows that Aave\u2019s TVL has remained stagnant between $13.9 billion and $15.1 billion since late April, reflecting continued caution among users. The incident underscores the interconnectedness of DeFi protocols, where vulnerabilities in one system can trigger cascading effects across the ecosystem.<\/p>\n

The hack also reignites debates on the security of cross-chain bridges and liquid restaking protocols. As Kelp DAO transitions to Chainlink\u2019s CCIP, industry participants will closely watch whether this new infrastructure can set a higher standard for cross-chain verification.<\/p>\n

Looking Forward<\/h2>\n

The rsETH restoration is a significant milestone for Kelp DAO, but the long-term impact on user trust and adoption remains to be seen. With Ethereum (ETH) currently trading at $2,091.70, down 0.51% in the last 24 hours, market participants remain cautious amid broader concerns about protocol security in DeFi.<\/p>\n

For Aave, the focus will be on rebuilding user confidence while managing the fallout from the bad debt created by the Kelp DAO exploit. The recovery of rsETH is a step forward, but the broader DeFi sector faces ongoing challenges in addressing systemic risks associated with interoperability and liquid staking.<\/p>\n

Image source: Shutterstock<\/i><\/span> Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Iris Coleman May 26, 2026 05:14 Kelp DAO fully restores rsETH backing after a $293M hack. Key recovery milestones and implications for Aave and DeFi. Kelp DAO has fully restored the backing for its liquid restaked token, rsETH, five weeks after a $293 million exploit compromised the protocol’s cross-chain bridge infrastructure. The incident, attributed to […]<\/p>\n","protected":false},"author":1,"featured_media":604909,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,8],"tags":[168,23,53,24801,25,24802],"class_list":{"0":"post-604908","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-blockchain","8":"category-ethereum","9":"tag-aave","10":"tag-defi","11":"tag-ethereum","12":"tag-kelp-dao","13":"tag-news","14":"tag-rseth"},"_links":{"self":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/posts\/604908","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/comments?post=604908"}],"version-history":[{"count":0,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/posts\/604908\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/media\/604909"}],"wp:attachment":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/media?parent=604908"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/categories?post=604908"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/tags?post=604908"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}