Kelp, a liquid restaking protocol, has paused its smart contracts for the restaking token (rsETH) following a significant cyber attack that resulted in an estimated $293 million loss. The platform identified suspicious cross-chain activity and has halted rsETH contracts across its mainnet and several Layer-2 networks. The breach exploited the rsETH adapter bridge contract, allowing the attacker to drain funds and convert approximately $250 million into Ether (ETH), according to blockchain security firm Cyvers.

This incident underscores the vulnerabilities within decentralized finance (DeFi) protocols, particularly regarding composability risks, as highlighted by Cyvers CEO Deddy Lavid. The fallout has prompted at least nine crypto protocols, including Aave, to freeze rsETH markets, indicating a broader sector impact. The ongoing trend of cybersecurity breaches in the crypto space raises concerns for investors and users alike, especially with Q1 2026 seeing around $482 million lost to hacks and scams.

Market professionals should closely monitor the implications of this attack on DeFi sentiment and regulatory scrutiny, as the incident could lead to increased calls for enhanced security measures across the sector.

Source: cointelegraph.com