Lido's EarnETH Vault Impacted by Kelp DAO Cross-Chain Bridge Theft

On April 21, Lido announced via social media that its EarnETH vault was affected by the theft of 116,500 rsETH from the Kelp DAO cross-chain bridge on April 18. According to BlockBeats, the incident involved approximately $292 million. EarnETH holds a risk exposure of around $21.6 million in rsETH through a leveraged position on Aave, representing about 9% of the vault's total assets. The EarnETH team is actively working to de-leverage and reduce risk, with outcomes dependent on the final decisions by Kelp, LayerZero, and Aave regarding loss sharing and bad debt management. Lido further stated that EarnETH has a $3 million 'first-loss protection mechanism' funded by the Lido DAO treasury, which will be used to cover losses if necessary. The vault has currently suspended redemption processing to assess the losses. This incident does not affect stETH and wstETH, as Lido's core staking protocol is not involved.