Onchain asset manager kpk declares ‘zero loss to depositors‘ after $23m Resolv exploit

Onchain asset manager kpk says that it has successfully shielded depositors from the fallout from this week’s $23 million Resolv protocol exploit.

The entity was one of several decentralised finance protocols affected by the collapse of Resolv’s USR stablecoin.

Some kpk yield vaults on Morpho had “limited exposure” to the RLP token, another yield token within the Resolv ecosystem.

“When the risk was detected, we immediately set the risk tolerance on the affected market to zero and blocked new allocations,” the project said on Wednesday.

“All Ethereum funds [have been] fully recovered. Zero loss to depositors.”

Stablecoin collapse

Resolv’s stablecoin, typically pegged to $1, fell as low as $0.2 on Monday. An attacker was able to mint some 80 million tokens using less than $200,000 in collateral.

They then swapped the USR tokens for staked versions, before swapping the staked tokens for Circle’s USDC stablecoin. In the end, they made off with approximately $23 million.

The episode served as yet another reminder of the double-edged nature of DeFi’s interoperability.

As USR plummeted, it became clear that many other projects aside from kpk were also affected.

Gauntlet, Re7 Labs, and 9summits were also Morpho curators that had created customised pools — called vaults — with exposure to Resolv.

In a brief post-mortem, kpk shared more details about how its infrastructure reacted under stress. Critically, the project indicated that it did not need to intervene to protect its users.

It immediately blocked new allocations to the vaults once the exploit was clear, and kpk vaults’ withdrawal queue allowed investors to exit their positions as liquidity returned.

“Same block, no manual intervention needed,” kpk said.

To be sure, the project, like others affected, took Monday’s opportunity to tighten oversight and improve its safety mechanisms.

That includes faster automation triggers, better integration with security alerting services, and other emergency responses, kpk said.

In the meantime, deposits into its Ethereum yield vault are back online.

Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.