Questions Raised
Crypto traders and holders are now second guessing on the future of De-Fi. Has the system become unsafe or has the system just revealed its real self? Decentralized Finance has been reaching its peak day by day for less than a decade. Today the question surrounding the continuity of this system is still under doubt.
Chain of Events
Last April 18, 2026, KelpDAO suffered a major turning point to its status since an attacker tricked LayerZero’s cross-chain messaging layer into believing a valid instruction had arrived from another network. This wiped out 116,500 rsETH into an attacker-controlled address. This has affected about 18% of the rsETH supply and follows a string of large DeFi hacks this month.
It took 46 minutes for KelpDAO to pause contracts to stop the initial drain that occurred in a single transaction. The emergency multi-signature is the key turning point to block two consecutive attempts by the hacker to steal an additional $100 million. The main vulnerability of the attack came from the one-to-one validation model that requires a single signature to authorize transactions.
In Hindsight
The attack was not only reliant on bypassing the smart contract or encryption. It highlights how brittle the system can be associated with a layered assumption. It was not only a systemic risk but a model risk since the system did not configure as it should. The cross-chain verification set-up in LayerZero-base was the root of it all. The lack of minimum standards has created a major risk not only in terms of cross-chain infrastructure but also restaking models, and lending markets.
This has only meant two things: the exploit has awakened the perspective of many in terms of stability of De-Fi; and it exposed the hidden flow of how De-Fi was built. The cost of this turn of events is the future of a system.
Effect
- Heavy withdrawals from major lending platforms, such as Aave.
Response
- Protocol respondes included freezing markets and pausing features. Aave halted rsETH activity, while Lido paused deposits related to the asset. Other projects took similar precautions to limit exposure as the situation unravelled.
- KelpDAO echoed this sentiment: “Earlier today we identified suspicious cross-chain activity involving rsETH. We have paused rsETH contracts across mainnet and several L2s while we investigate. We are working with @LayerZero_Core, @unichain, our auditors and top security experts on RCA. We will keep you posted as we learn more about this situation.”
