Kelp DAO announces complete rsETH recovery following $293M exploit five weeks ago
Five weeks after falling victim to a $293 million security breach, Ethereum liquid staking protocol Kelp DAO has announced that its rsETH token has achieved full collateralization once again.
Following a five-week restoration process, Ethereum liquid staking protocol Kelp DAO has announced that its restaked Ether token is now fully backed again after experiencing a $293 million exploit attributed to North Korea's Lazarus Group on April 18.
In a Monday announcement on X, Kelp DAO revealed that it had transferred the concluding batch of 20,373.7 Kelp DAO restaked ETH (rsETH) tokens to the LayerZero smart contract that handles the locking, minting, burning and releasing functions of rsETH during transfers across different blockchain networks.
"This closes the operational part of the rsETH recovery plan," Kelp stated. Multiple cryptocurrency protocols provided financial support to restore the full backing of rsETH as part of the DeFi United initiative.
The April security breach at Kelp DAO created a cascading effect across the cryptocurrency lending sector that impacted billions of dollars worth of liquidity and reignited worries about how interconnected decentralized finance protocols have become.
Among the platforms most severely affected was Aave, as the attacker behind the Kelp DAO breach deposited a substantial amount of the stolen 116,500 rsETH as collateral on Aave's lending platform in order to borrow wrapped Ether, which resulted in $190 million worth of bad debt and sparked a significant wave of user withdrawals.
The security breach at Kelp DAO represented one of 25 cryptocurrency hacks that occurred during April, which collectively resulted in $630 million in losses, marking it as the worst month since February 2025, when cryptocurrency exchange Bybit suffered a record-breaking $1.5 billion hack.
On May 13, the initial batch of 25,000 rsETH was transferred, which enabled rsETH bridging functionality to resume between the Ethereum mainnet and the blockchain's various layer 2 networks.
The day after, Kelp reopened the withdrawal functionality for rsETH, and on Tuesday the protocol confirmed that rsETH minting, redemption and rewards operations "have been running normally."
Aave's TVL bleed stops, but has not recovered
The security exploit at Kelp DAO played a role in Aave's total value locked declining from $26.4 billion to beneath $14 billion, causing it to lose its traditionally held status as the DeFi protocol with the largest TVL.
According to data from DefiLlama, net outflows from Aave's lending markets have diminished over the previous month.
Nevertheless, Aave's TVL has demonstrated no indications of recovery, remaining in the range between $13.9 billion and $15.1 billion since approximately one week following the occurrence of the incident.
