KelpDAO $300M rsETH Exploit Freezes LayerZero Markets

KelpDAO’s suspected ~$300M exploit appears to target rsETH activity via LayerZero routes that are concentrated on Layer 2 rather than Ethereum L1. Anonymous sources told Cryptopolitan that L1 rsETH remains backed, but multiple DeFi protocols paused or froze rsETH-related operations after borrow rates rose and liquidity tightened. Attack timeline and amounts: a wallet linked to Tornado Cash’s 1 ETH pool triggered KelpDAO’s LayerZero EndpointV2 logic, minting 116,500 rsETH (~$292M). Two additional packets aimed at ~40,000 rsETH each (~$100M combined) were reverted after the KelpDAO emergency multisig called pauseAll. Loss estimates vary, with a worst case cited around ~9,000 ETH. On-chain fallout: attackers deposited the stolen rsETH into Aave V3 as collateral, then borrowed large ETH and WETH; the funds were reportedly routed back through Tornado Cash. Aave said the problem is in the rsETH path and froze rsETH markets on both V3 and V4. SparkLend, Fluid, and Upshift also paused rsETH vaults/markets, and exposure was flagged across Pendle, Compound, Euler, Beefy, and Yearn integrations. Trader relevance: even if L1 backing holds, rsETH pricing and oracle/valuation uncertainty can block redemptions and delay deleveraging, increasing risk premia. Near-term, watch rsETH redemption/liquidity metrics and whether Aave Umbrella or related settlement mechanisms restore normal pricing. Main keyword: rsETH and KelpDAO are driving immediate market freezes across interconnected DeFi lending.