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- Kelp DAO lost $290M after using a single-verifier DVN configuration on its LayerZero bridge — a setup LayerZero had previously warned against — creating a single point of failure that attackers exploited.
- Aave suffered collateral damage, with the attacker using stolen rsETH to borrow against the lending protocol, leaving ~$195M in bad debt and triggering nearly $9B in TVL outflows.
- Strategy’s Saylor signaled another Bitcoin purchase with a cryptic post, while the company also proposed semi-monthly dividend payments to stabilize its stock price ahead of a June shareholder vote.
The decentralized finance world woke up to one of its most significant breaches in recent memory over the weekend, while elsewhere in crypto, a familiar name signaled yet another large Bitcoin move.
How $290 Million Left Kelp DAO
An attacker pulled approximately 116,500 restaked ETH tokens — valued at roughly $292 million — from Kelp DAO’s cross-chain bridge on Saturday. The target was a bridge powered by LayerZero, and the entry point was surprisingly simple: a single verification pathway with no backup.
LayerZero confirmed Monday that Kelp had configured its decentralized verifier network with only one verifier, creating a single point of failure. The protocol said it had previously advised Kelp against this approach, recommending a multi-verifier setup as standard practice. Kelp proceeded with the riskier configuration regardless.
LayerZero was direct in deflecting blame: this was an application-level mistake, not a flaw in LayerZero’s core infrastructure. The company announced it would stop supporting any applications still running a single-verifier design and is urging all projects to migrate immediately.
Early attribution from LayerZero points toward North Korea-linked threat actors, though no formal confirmation has been issued.
The Damage Spreads to Aave
The fallout didn’t stop at Kelp. The attacker moved quickly, using stolen rsETH tokens as collateral on Aave to borrow real liquidity — leaving an estimated $195 million in bad debt on the lending protocol. Aave’s total value locked dropped roughly $8.9 billion in the aftermath, falling to around $17.5 billion.
Aave froze all rsETH positions across its v3 and v4 deployments to contain the damage. Its own smart contracts were not compromised, but the collateral exposure created serious risk. Pseudonymous Spark strategist MoneySupply warned that a 15–20% drop in ETH’s price under these liquidity conditions could trigger a cascade of liquidations and further bad debt.
Who Pays?
With no recovery plan announced, the community is publicly arguing over who absorbs the losses. OneKey CEO Yishi Wang suggested opening negotiations with the attacker, offering a 10–15% bounty, and having LayerZero’s ecosystem fund cover the remainder given its financial depth. DeFiLlama co-founder 0xngmi outlined three bleak options: spread losses across all users, write off rsETH holders on Layer 2s, or attempt a pre-hack snapshot restoration — which he acknowledged would be extremely difficult.
Strategy Eyes More Bitcoin
Away from the DeFi chaos, Strategy’s Michael Saylor posted “Think Even ₿igger” on Sunday alongside a chart of the company’s purchase history — a pattern that has reliably preceded major Bitcoin acquisition announcements. This follows the company’s disclosure just days earlier that it bought 13,927 Bitcoin for $1 billion between April 6 and 12.
The company also proposed moving its preferred stock dividends to a semi-monthly schedule — 24 payments per year — in a bid to stabilize share price and attract new investors. A shareholder vote is expected at the annual meeting on June 8.
Strategy holds 780,897 Bitcoin worth roughly $58.2 billion, making it the largest publicly traded Bitcoin holder by a wide margin — even as it carries $14.46 billion in unrealized losses on its digital asset holdings.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
