#KelpDAO跨链桥遭攻击 Kelp DAO $290 million bloodbath: The "Death Spiral" of Non-Isolated Lending and the Funeral of DeFi's Nested Structures

On this early morning in April 2026, the blockchain's block time remains unwavering at just over ten seconds, but within these few alternating blocks, $290 million in real money vanished like stars falling into a black hole, leaving not even a muffled sound behind. This is not a strategic transfer by a sovereign wealth fund of some country, but the most absurd and cold-blooded single-day heist in DeFi history — the Kelp DAO rsETH Exploit.
While everyone marvels at the hacker’s incredible code-cutting skills, Wall Street quant veterans and hardcore crypto punks only feel a bone-chilling cold. Because this is not just a simple technical theft; it’s a dimensionality reduction attack on the underlying logic of DeFi. The hacker didn’t pry open a safe; they simply proved that a piece of worthless paper in a non-isolated lending system was worth a fortune, then justifiably emptied the entire vault.

At the end of the Russian nesting doll, hangs a portrait of the mainnet’s demise

To understand this $290 million tragedy, you must first grasp the most head-spinning and counterintuitive Ponzi alchemy in the Web3 world: Liquidity Re-Staking Tokens (LRT).
In traditional finance, collateral is just collateral — you take a house to the bank for a loan, and the property rights are locked in. But in DeFi’s hormone-overloaded casino, capital efficiency must be pushed to the extreme. You hold an Ethereum. You deposit it into Lido, converting it into stETH, earning basic staking rewards. Not enough? You then deposit the stETH into EigenLayer, a re-staking protocol, trying to earn validation fees from other networks. At this point, liquidity should have dried up, but Kelp DAO jumps in and says: Brother, give me your receipt, and I’ll give you a new receipt called rsETH. That’s liquidity re-staking tokens. With this rsETH, you can not only earn triple yields but also take it to a lending protocol, treat it as a high-quality asset, and borrow out another Ethereum. With one foot on the ground and the other in the sky, you’re not just soaring—you’re even planning to build a villa in the stratosphere.
But the laws of physics in finance are brutally cold: every derivative of assets exponentially amplifies the systemic risk (DeFi Contagion Risk). You think your rsETH is a golden ticket, but in reality, it’s a time bomb filled with five layers of nested contracts. As long as any line of code in the underlying Ethereum mainnet, the staking layer Lido, the re-staking layer EigenLayer, or the bundling layer Kelp DAO has a logical flaw, this massive financial edifice can collapse instantly. And this time, Kelp DAO is that base layer being pulled out.
The hacker exploited logical vulnerabilities in smart contracts, using extremely covert flash loan attacks and oracle manipulations, to conjure a vast amount of “air rsETH” unsupported by any underlying assets in a very short time. If the story ended here, it would just be Kelp DAO’s internal affair, at most a zeroed-out air token, with only greedy speculators paying the price. But what turned this landmine into a nuclear bomb was the “non-isolated lending model” revered in the DeFi world.

Non-isolated Lending: Putting Everyone’s Bankbooks in an Unlocked Drawer

The hacker now holds a pile of freshly minted, zero-cost rsETH. They’re not foolish enough to dump these tokens on a decentralized exchange (DEX) to cash out, because the meager liquidity couldn’t handle the $290 million sell pressure, and slippage would eat up 99% of their profit. Instead, the hacker gracefully turns and walks into the gates of DeFi lending giant Aave. This is the fatal flaw of the non-isolated lending model.
To maximize “capital utilization,” large lending protocols like to pool everyone’s funds into a single massive pool. In this melting pot, whether you deposit rock-solid USDC or a volatile altcoin, as long as the governance token holders vote to approve, they can be used as collateral to borrow any real asset in the pool.
The hacker shamelessly deposits a huge amount of air rsETH into Aave. At this moment, in Aave’s oracle’s view, because the prices on the DEX haven’t collapsed yet, these rsETH still shine with noble luster, worth a fortune. So, the smart contract — a blind, emotionless machine — mechanically opens the vault for the hacker based on collateral ratios. The hacker then borrows out USDC, USDT, WBTC, and real ETH from the pool with these worthless papers.
Throughout this process, no one stops them; all operations follow the code’s logic. Even at the moment of transaction bundling, the system calculates interest for the hacker. When the hacker cross-chains and launders the real assets, then walks away, what’s left for Aave and the entire DeFi ecosystem is a bottomless black hole. This is the infamous Aave Bad Debt.
Initially, retail users who deposited USDC just wanted a safe 4% annual yield, but suddenly find they can’t withdraw their funds. The pool is drained, leaving only a pile of rsETH worth approaching zero. The non-isolated lending model is like a thick iron chain, tightly linking what should be independent ships. Once one ship catches fire, the entire fleet has no chance to escape.

The wild dance of the death spiral and the merciless meat grinder of liquidity
Once bad debt forms, the DeFi death spiral is no longer just an economic term but a brutal sociological experiment. When the market realizes rsETH has suffered a catastrophic blow, its price begins plummeting towards the core. Aave’s liquidation mechanism finally kicks in, attempting to liquidate the hacker’s collateral to cover the losses. But this is a ridiculous deadlock. Liquidators aren’t charities; they need real money to buy these devalued rsETH and sell them on the market for arbitrage.
However, once it’s exposed that rsETH is unsupported by any real assets, there’s not even a fool willing to buy at a dollar. Without liquidity, liquidation can’t happen; without liquidation, bad debt remains on the books forever; and with bad debt lingering, panic spreads like a plague. This panic triggers a stampede of withdrawals. All users with assets in Aave frantically hit the withdrawal button. The utilization rate of the pool skyrockets to 100%, and the lending rates are automatically pushed to absurd levels by the algorithm, trying to attract new deposits. But this only worsens the situation — innocent users who use healthy assets as collateral and borrow normally suddenly see their interest rates skyrocket, their collateralization ratios deteriorate, and they get liquidated. This is the ultimate display of contagious risk (DeFi Contagion Risk).
Kelp DAO’s vulnerability not only killed itself but also injected poison into the