In a significant recovery effort, Ethereum-based Kelp DAO and Aave have successfully restored the security status of rsETH tokens after a recent cyber intrusion. Following this effort, the rsETH tokens, valued at $1.5 billion, remain well-collateralized across various networks. Over 117,000 tokens, equivalent to about $278 million, are set to be reintroduced into the protocol over a span of two weeks.
Token Rehabilitation Efforts Underway
After an upsetting cyberattack in April, Kelp DAO took prompt measures by permanently removing compromised rsETH tokens from the Arbitrum network. This bold move was a strategic effort to regain confidence among users and ensure the continuity of operations without the hacker’s interference.
A coordinated effort between a wallet managed by Aave’s Recovery Guardian and Kelp’s internal security wallet ensures the replacement of burned rsETH tokens. Operating through secure smart contracts, these transfers will proceed over the next couple of weeks.
Kelp DAO representatives stressed that rsETH tokens, circulated on mainnet and layer-2 networks, consistently uphold a market worth of approximately $1.5 billion, supported at all times by collateral backing.
How Did the Security Breach Occur?
Attributed to the notorious Lazarus Group, the cyberattack in April exploited vulnerabilities in the rsETH adapter bridge, resulting in a $293 million loss. While no critical contract flaws were detected by OpenZeppelin, their report highlighted basic operational inefficiencies.
Kelp DAO responded by reinforcing security measures, including requiring multiple validations for bridge transactions. The DAO is also planning to integrate Chainlink’s cross-chain protocol to further bolster security.
Are Users Affected by These Developments?
Amid efforts to regain stability, the total value locked in Kelp’s protocol has currently seen a decline to $1.55 billion. This figure had once surpassed $2 billion back in September 2025 before being impacted by the security breach.
The recovery scheme is devised to ensure users regain access to their assets seamlessly. Kelp assures that withdrawal functions will be made available within 24 hours of the smart contract’s first transfer. Operations for rsETH are expected to return to their usual status upon finalizing the process.
“Once the initial phase is complete, withdrawals will temporarily reopen; afterwards, all rsETH operations will resume their usual course,” stated a representative from Kelp DAO.
Kelp’s platform, built on Ethereum and empowered by EigenLayer infrastructure, capitalizes on high liquidity within the decentralized finance (DeFi) ecosystem, offering users potential returns on ETH and liquid staking tokens.
Despite the technical challenges, Ethereum derivative investors remain cautiously optimistic, although spot Ether prices have recently fallen to $2,260, reaching a twelve-day low.
