Lido says the KelpDAO rsETH exploit is contained to its experimental Earn vaults and that its core liquid‑staking products remain “safe and stable.”
What happened
- On April 18 the Kelp cross‑chain bridge was exploited, draining roughly 116,500 rsETH (about $292M). Several DeFi platforms paused rsETH markets in response.
- Lido reports the incident only directly affects its EarnETH vaults — the flagship staking tokens stETH and wstETH are not involved and continue to operate normally.
Exposure and recovery
- EarnETH’s direct rsETH exposure is limited: roughly 9% of the vault’s TVL, about $21.6M, sits in a leveraged rsETH/ETH position on Aave.
- Lido says roughly $70M of ETH linked to the wider exploit has already been recovered. Asset recovery and loss‑allocation discussions are still ongoing with Kelp, LayerZero and lending partners.
Mitigations and protections
- Managers paused EarnETH deposits and withdrawals while they deleverage affected positions, reduce wETH debt exposure, and optimize position structures to ease pressure on stressed lending markets.
- If residual losses remain after recovery efforts, EarnETH can draw on a $3M “first‑loss” buffer funded from the Lido DAO treasury. That buffer is part of a $5M DAO allocation approved in March and is structured so DAO‑owned vault shares absorb losses before other depositors.
- Lido says DVV and EarnUSD vaults have no rsETH exposure and remain operational. A GGV sub‑vault is showing negative returns due to circular staking strategies plus rising on‑chain lending rates; managers are rebalancing and adjusting strategy parameters.
Operational notes
- While the review continues, withdrawals across the Earn suite will be processed using pre‑incident valuations to keep treatment consistent.
- Lido has emphasized the separation between its experimental Earn products and the core staking protocol; the rsETH exploit “does not involve the Lido staking protocol itself.”
Bottom line
Lido frames the event as a serious but contained exploit that hit leveraged Earn vault strategies rather than its core staking services. Recovery work and discussions on loss distribution are still underway, with a DAO‑funded first‑loss cushion in place to protect depositors while managers deleverage and stabilize positions.
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