Cardano(ADA) founder Charles Hoskinson says the $292 million KelpDAO breach was a verifier failure that turned restaked Ether (ETH) into poisoned collateral across DeFi.
Hoskinson Breaks Down Bridge Forgery
On a livestream Hoskinson argued the Apr. 18 exploit drained roughly 116,500 rsETH from KelpDAO's Ethereum escrow through a forged cross-chain message.
He said the attack did not stem from broken contract math inside Kelp or LayerZero.
The Cardano founder pointed to a one-of-one verifier configuration, saying a three-of-five setup would have blocked the forgery. "The failure was in the verification logic, not the application logic," he said.
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Contagion Spread Through Lending Markets
Hoskinson called the novelty the contagion itself, not the theft, as the attacker used stolen rsETH as collateral to borrow liquid assets.
That turned the breach into a balance-sheet problem for at least nine protocols. He said Aave alone saw between $6.6 billion and $8.45 billion in withdrawals, while rsETH swung between $1,600 and $2,500 in the first 24 hours.
LayerZero has since said it will stop signing messages for apps running single-verifier setups and linked the exploit to North Korea's Lazarus Group, specifically its TraderTraitor subunit. KelpDAO contained the mint within 46 minutes by pausing rsETH on Ethereum and every connected layer-2. Total value locked across DeFi fell by roughly $13 billion in the 48 hours that followed.
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