Protocol restores backing, reopens minting and redemptions following April exploit
Kelp DAO said it has completed a five-week recovery effort to restore rsETH backing after a $293 million exploit on April 18, 2026. The Ethereum liquid staking protocol transferred the final tranche of 20,373.7 rsETH to LayerZero smart contracts on May 26, marking the operational close of its recovery plan.
“This closes the operational part of the rsETH recovery plan,” Kelp DAO said in an X post on May 27. The protocol confirmed that rsETH mints, redemptions, and rewards “have been running normally” since May 14, when withdrawals were reopened.
Cascade Through DeFi Lending
The April 18 exploit triggered cascading losses across DeFi lending markets. The attacker deposited 116,500 stolen rsETH as collateral on Aave, borrowing wrapped Ether and creating $190 million in bad debt. Aave’s total value locked fell from $26.4 billion before the incident to below $14 billion in the immediate aftermath, surrendering its position as the largest DeFi protocol by TVL.
Recovery efforts began within days. On May 13, Kelp DAO transferred the first tranche of 25,000 rsETH and reopened bridging. Multiple crypto protocols contributed funds under the DeFi United initiative to restore rsETH backing, though the source did not specify which protocols participated.
Aave’s TVL has stabilized but not recovered. Since approximately one week after the incident, the lending platform’s TVL has hovered between $13.9 billion and $15.1 billion. Net outflows from Aave have eased, but the protocol remains significantly below pre-exploit levels.
April’s Broader Hack Wave
The Kelp exploit occurred amid a broader wave of crypto security breaches. Twenty-five crypto hacks took place in April 2026, resulting in combined losses of $630 million, according to available data. The exploit was attributed to North Korea’s Lazarus Group, though the original attack vector was not disclosed in available sources.
The $293 million loss ranks among the year’s largest protocol exploits. For context, the Bybit exchange hack in February 2025 resulted in $1.5 billion in losses, marking a record for single-incident exchange breaches.
Kelp DAO’s recovery plan closing the operational phase does not clarify whether additional restoration obligations remain or if the LayerZero transfer represents full recovery completion.
