Kelp DAO announces full recovery of rsETH: 293 million USD stolen by North Korean hackers 5 weeks ago

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Ethereum liquid staking protocol Kelp DAO has completed a 5-week recovery plan, with rsETH cross-chain liquidity, redemption, and reward mechanisms now fully operational. This recovery was facilitated by joint funding from multiple protocols. (Background: 2026's largest DeFi incident: Kelp suffered $292M theft, Aave bad debt nearly $200M, rsETH backing collapsed) (Context: Aave leads five major protocols in joint proposal: requesting Arbitrum DAO to unfreeze 30,000 ETH, channeling it into DeFi United to restore rsETH collateral) Ethereum liquid staking protocol Kelp DAO completed its 5-week recovery operation last week, announcing that its restaked Ethereum token rsETH has fully resumed operations. Behind this recovery lies the cascading effect of the $293M theft by North Korea's Lazarus hacker group on April 18. Kelp DAO announced on X last Monday that the final batch of 20,373.7 rsETH has been officially sent into the LayerZero smart contract, which handles the locking, minting, burning, and release of rsETH during cross-chain transfers. This operation marks the formal conclusion of the execution phase of the rsETH recovery plan. This recovery was not accomplished by Kelp DAO alone. Multiple crypto protocols contributed funds through the "DeFi United" initiative to jointly rebuild rsETH's collateral. Kelp DAO stated that since reopening rsETH withdrawals earlier this month, core functions such as minting, redemption, and reward distribution have all operated smoothly. Looking back at the recovery timeline, the first batch of 25,000 rsETH was transferred on May 13, when rsETH had reopened cross-chain channels between Ethereum mainnet and various Layer 2 networks. The following day, Kelp DAO officially reactivated the withdrawal function. The cascading effects of Kelp DAO's theft incident on DeFi liquidity were far more severe than expected. Aave was one of the first protocols to feel the shockwaves. The hacker deposited the stolen 116,500 rsETH in large quantities into the Aave lending platform as collateral, borrowing Wrapped Ether, causing $190M in bad debt and triggering a chain withdrawal wave. Aave's total value locked plummeted from $26.4B to below $1.4B, losing its long-held position as the top DeFi protocol. DefiLlama data shows that net outflows from the Aave lending market have noticeably slowed over the past month. However, Aave's TVL has yet to show clear signs of recovery, hovering between $13.9B and $15.1B since about a week after the incident. This event also serves as a reminder of the interconnectedness of DeFi protocols. Once the funding chain between liquid staking, restaking, and cross-chain bridges breaks, the impact quickly spreads to downstream lending markets. Although Kelp DAO's recovery has concluded, rebuilding liquidity across the DeFi ecosystem will still take time.

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