Bitfinex Blog/
What the KelpDAO Exploit Reveals About DeFi’s Hidden Risks
Attackers exploited KelpDAO's cross-chain bridge, draining approximately $292 million in rsETH by compromising RPC nodes and using a DDoS attack to bypass a single-verifier configuration. The stolen, unbacked rsETH was then used as collateral on lending protocols, notably Aave, to borrow approximately $190 million in WETH, creating significant bad debt.
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Why It Matters
The incident highlights the systemic risk of DeFi composability, where a failure in one protocol's infrastructure can propagate bad collateral across the wider ecosystem, affecting protocols that were not directly hacked.