: KelpDAO's $292M Bridge Hack Just Broke Aave and Locked Real Lenders Out

 


On April 18, 2026, a single forged message on a cross-chain bridge became 2026's largest DeFi exploit. Someone called the lzReceive function on LayerZero's EndpointV2 contract, tricked KelpDAO's bridge into accepting it as a legitimate transfer, and walked away with 116,500 rsETH worth $292 million. That was 18% of rsETH's entire circulating supply, minted on Ethereum mainnet with nothing backing it.

The attacker did not stop at the theft. The stolen rsETH went straight into Aave V3 as collateral, and against it, the attacker borrowed approximately $236 million in wrapped ETH. Real funds, borrowed against tokens that had just been fraudulently minted. Aave was left with roughly $280 million in bad debt, frozen rsETH markets on both V3 and V4, and an ETH utilization rate that hit 100%.

That last number matters more than it sounds. When ETH utilization on Aave reaches 100%, lenders cannot withdraw. Real WETH suppliers, people who had deposited ETH into Aave's lending pool with no connection to rsETH or KelpDAO, found themselves locked out of their own funds. One lender described watching their position turn negative in real time, unable to exit.

Aave's TVL fell from $26.396 billion to $20.114 billion within hours. A decline of $6.28 billion. AAVE token dropped 19% on the day. ETH outflows from the protocol reached $5.4 billion. TRON founder Justin Sun publicly addressed the attacker on X, asking how much it would take to negotiate a return. No response came.

Nine or more DeFi protocols issued emergency statements. Lido, Fluid, Ethena, Euler, f(x) Protocol, Nest, Reservoir and Compound all confirmed zero exposure or paused their LayerZero bridges while the investigation ran. LayerZero itself confirmed it was in active remediation with KelpDAO and promised a full post-mortem.

The Chainalysis data cited on X put 2025 down as the most devastating year in crypto security history, with more than $3.4 billion stolen. KelpDAO's exploit opens 2026's account at $292 million and counting.

The full breakdown of the exploit mechanics, the Aave contagion in detail, and every protocol response is covered at CryptoNewsLive.org. If you hold any position in a DeFi lending protocol using liquid restaking tokens as collateral, this story is directly relevant to your funds.

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