Kelp DAO Finalizes rsETH Recovery Following $293M Lazarus Group Exploit

TLDR

• Kelp DAO has finalized the operational recovery phase for its rsETH token following a $293 million exploit in April 2026 linked to North Korea’s Lazarus Group.
• A final batch of 20,373.72 rsETH was moved into the LayerZero OFT adapter, bringing cross-chain bridge coverage back to full capacity.
• Current data from the protocol’s dashboard indicates a 100.01% ETH backing ratio, confirming complete collateralization of rsETH.
• Aave, among the most impacted platforms, contributed to recovery efforts but has seen its total value locked remain depressed at approximately $14 billion versus $26.4 billion previously.
• All core functions including minting, redemptions, and rewards have operated smoothly since withdrawal functionality returned on May 14.

Ethereum-based liquid staking platform Kelp DAO has announced the conclusion of its operational recovery phase for restaked Ether tokens, marking five weeks since the $293 million security breach attributed to North Korea’s notorious Lazarus Group.

On May 25, the protocol executed the transfer of its final 20,373.72 rsETH allocation into the LayerZero OFT adapter. This infrastructure component facilitates token transfers and liquidity management across multiple blockchain networks.

This concluding transfer marked the end of an extensive replenishment campaign during which roughly 116,000 rsETH was restored to the adapter throughout a two-week period, with assistance from Aave and additional protocols participating in the DeFi United recovery coalition.

According to Kelp’s real-time monitoring dashboard, the platform now maintains a 100.01% ETH backing ratio alongside complete bridge lockbox coverage utilizing both LayerZero and Chainlink systems.

The team confirmed that all essential services—including minting, redemption processing, and reward distribution—have functioned without interruption since withdrawal capabilities were restored on May 14.

Details of the April Security Breach

The Lazarus Group penetrated Kelp DAO’s security defenses on April 18, extracting 116,500 rsETH tokens valued at approximately $293 million.

Subsequently, the exploiter deposited a substantial portion of these stolen assets as collateral on Aave’s decentralized lending platform to extract wrapped Ether loans. This maneuver saddled Aave with $190 million in uncollateralized debt and sparked widespread panic withdrawals.

Aave’s total value locked plummeted from $26.4 billion to under $14 billion following the incident, causing the protocol to forfeit its status as DeFi’s largest platform by TVL.

The Kelp DAO breach represented one of 25 cryptocurrency exploits documented during April. Aggregate losses for that month totaled $630 million, establishing it as the sector’s worst month since Bybit suffered a $1.5 billion hack in February 2025.

Aave Continues Struggling Post-Exploit

While net withdrawals from Aave’s lending protocols have moderated during the past month, based on DefiLlama analytics.

Nevertheless, Aave’s TVL has demonstrated no meaningful rebound. The metric has fluctuated between $13.9 billion and $15.1 billion since approximately one week following the security incident.

The initial allocation of 25,000 rsETH was deployed on May 13, enabling the resumption of rsETH transfers between Ethereum’s primary network and secondary layer 2 ecosystems.

Kelp confirmed the operational recovery phase has officially concluded. The more substantial challenge of restoring user trust continues.

Recent security incidents have heightened investor scrutiny regarding bridge security protocols, collateralization transparency, and financial solvency throughout restaking ecosystems.

Platforms have responded by deploying enhanced real-time reserve monitoring systems, proof-of-reserves verification mechanisms, and publicly auditable recovery wallet tracking.

KelpDAO has directed community members to its live monitoring dashboard as verification that operations have normalized and rsETH maintains full backing.

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