GoPlus Security 🚦 (@GoPlusSecurity): ⚠️ Vulnerability Analysis: KelpDAO Attack Incident Breakdown

⚠️ Vulnerability Analysis: KelpDAO Attack Incident Breakdown On April 18 evening, the DeFi platform @KelpDAO was exploited, resulting in losses of up to $292 million, making it the largest DeFi security incident so far in 2026. I. Root Cause of the Attack The attacker forged cross-chain messages and maliciously extracted a large amount of $rsETH from KelpDAO’s LayerZero bridge. They then rapidly deployed the stolen assets into lending protocols such as Aave, Compound, Euler, and Fluid, using high leverage to borrow additional funds, which ultimately led to massive bad debt across multiple protocols. The attacker called the lzReceive function on LayerZero EndpointV2, injecting a carefully crafted malicious transaction into KelpDAO’s Ethereum cross-chain contract. After KelpDAO’s contract verification passed, 116,500 rsETH were released to the attacker’s designated address: https://etherscan.io/tx/0x1ae232da212c45f35c1525f851e4c41d529bf18af862d9ce9fd40bf709db4222 This transaction was approved by only one DVN (Decentralized Verifier Network) node, meaning a 1-of-1 DVN configuration, which is critically weak in security. In addition, the system failed to strictly verify the authenticity of the source-chain transaction. This is a classic single-point-of-failure risk in LayerZero OFT/OApp architecture. 👉 Recommendation: all projects using LayerZero should immediately check whether they use a secure DVN setup (≥2-of-N) and implement stricter cross-chain transaction validation. II. Attacker Addresses & Fund Flow Initial receiving address: 0x8B1b6c9A6DB1304000412dd21Ae6A70a82d60D3b Main aggregation wallet: 0x5d3919F12bCc35c26Eee5F8226A9bee90c257Ccc Secondary address: 0xCBb24A6B4DAfaAA1a759A2F413eA0eB6AE1455CC Linked with #TornadoCash, indicating professional laundering behavior. Other related addresses: 0xBb6A6006Eb71205e977eCeb19FCaD1C8d631C787 0x1F4C1c2e610f089D6914c4448E6F21Cb0db3adeF 0xeBA786C9517a4823A5cFD9c72e4E80BF8168129B 0x8d11AeAC74267DD5C56D371bf4AE1AFA174C2d49 (Note: activity also observed on L2 networks such as Arbitrum.) Because rsETH has limited secondary market liquidity, direct selling would cause severe slippage. The attacker instead used a more efficient strategy: 1. Collateralized lending: Deposited stolen rsETH into Aave V3, Compound V3, Euler, etc. as collateral. 2. Borrowed WETH: Took out highly liquid WETH loans against rsETH, with total debt exceeding $236 million. 3. Cross-chain laundering: Bridged borrowed WETH to Arbitrum in batches and laundered via Tornado Cash. 4. Final profit: The attacker ultimately obtained ~106,466 ETH (≈ $250 million) through collateral borrowing + asset liquidation. III. Impact on Lending Protocols (Aave, Compound, etc.) Because the attacker used synthetic/unstable rsETH with no real backing as collateral to borrow real WETH, these positions effectively became bad debt for lending protocols. ➜Aave Loss exposure: ~$177M – $196M Bad debt handling: first covered by the Safety Module / Umbrella system (Aave’s automated reserve pool). ▪️Umbrella currently holds ~$50M equivalent WETH ▪️If losses exceed reserves → LPs may suffer direct losses, potentially triggering liquidity outflows and deeper stress ➜Compound ▪️WETH, USDC, wstETH markets on multiple chains -suspended ▪️Liquidation functions remain active to prevent further contagion ➜Lido Finance Suspended new deposits for earnETH product ➜SparkLend rsETH-related markets frozen ➜Fluid -Suspended affected markets -Clarified no meaningful rsETH exposure on L2s; user funds remain safe ➜Euler Finance Confirmed ~$840K impacted borrow exposure ➜Silo Finance Issued statement and suspended related markets IV. Key Follow-up Areas ▪️ KelpDAO root cause analysis (RCA) and compensation plan have not yet been released ▪️ Whether Aave’s Umbrella module can fully absorb bad debt will determine LP loss risk ▪️ How other lending protocols handle remaining bad debt and user impact ▪️ Post-attack fund movement, potential freezing, and regulatory scrutiny ▪️ A significant portion of ETH remains spread across wallets and has not been fully laundered yet