🐳 Daily Edition: Lazarus Group up to $600M stolen in April, Aave liquidity remains stuck

Just 18 days after a North Korean hacker group known as “Lazarus Group” successfully exploited Drift Protocol for $280M, they’ve struck again with another multi-hundred million dollar hack against Kelp DAO. Over the last 10 years, black hat groups (many of them affiliated with nations like North Korea) have stolen over $17B in crypto.

We’ve seen several hacks of this magnitude, but what makes this one particularly bad is the potential fall out. In short, Kelp is a restaking protocol which allows Ethereum holders across 20+ chains to access staking yield without the lock up that customarily goes with it by giving you a “receipt token” (called rsETH) representing the underlying staked ETH. Users often go a step further, depositing that receipt token as collateral and repeating the whole process in a strategy we call “looping.”

If you’re a bit confused how this works, don’t worry, I think most of Kelp’s users were in the same boat… but unfortunately the group responsible for the hack was more the knowledgeable on the subject, as they used the stolen receipt tokens from Kelp as collateral on Aave to siphon $236M in real ETH and stablecoins from the ecosystem.

We now sit 48 hours after the hack, and many of Aave’s markets are still frozen along with several ecosystem partners who had exposure to rsETH with no definitive answer on how they’ll proceed. Kelp and their infrastructure partner LayerZero still seem to be playing the blame game with each other, but eventually someone will have to eat the loss so the ecosystem moves on.

To read more about the exploit and where it may go next, check out Arkham’s thread on X here.

This might be one of the best crypto tweets I’ve ever read, and the worst part is it’s basically 100% accurate.

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