The total value locked on decentralized lending platform Aave fell after hackers exploited the creation of rsETH via the KelpDAO chain, with LayerZero saying initial indications point to North Korea’s Lazarus Group.
Layer Zero He says KelpDAO was exploited for approximately $290 million on April 18, and describes the attacker as a “highly sophisticated state actor,” likely linked to the Lazarus Group and its TraderTraitor unit.
In a statement, LayerZero says the incident was limited to KelpDAO’s rsETH setup and did not spread to other assets or applications using the protocol.
According to blockchain tracker LookonChain, the exploit resulted in approximately $292 million worth of rsETH being minted illegally. The attacker then used the token as collateral to borrow more than 82,600 Ethereum (ETH), worth about $195 million, from Aave.
LookonChain says the bad debts led to massive withdrawals from Aave, causing TVL to fall by $6.28 billion in less than 48 hours, from $26.396 billion to $20.114 billion.
It says major withdrawals include $431 million from MEXC, $405.7 million from wallet 0x7CD0, which is likely linked to Nonco, and $392 million from Abraxas Capital.
LayerZero says the attack targeted the RPC infrastructure used by its decentralized verification network rather than exploiting the LayerZero protocol itself, adding that the compromised nodes have been replaced and the verification network is back online.
Aave has moved to freeze rsETH markets on V3 and V4 to prevent additional borrowing and deposits while it evaluates options to cover any shortfall.
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