Lido pauses EarnETH vault after KelpDAO exploit

Lido paused EarnETH vaults after a KelpDAO exploit exposed 9% to rsETH. Core staking is unaffected, $70M has been recovered, and a $3M buffer protects users.

Lido Finance has disclosed that its EarnETH vault is exposed to approximately 9% of rsETH following the KelpDAO exploit on April 18, which resulted in the loss of about 116,500 rsETH, valued at $292 million. In response, Lido promptly paused deposits and withdrawals in the EarnETH vault to mitigate risk and prevent further complications, particularly from leveraged trading strategies. The core staking products, including stETH and wstETH, remain unaffected and continue to operate as usual. To safeguard users, Lido activated a $3 million DAO-funded first-loss buffer, and around $70 million in ETH has already been recovered. While the exploit has led to higher borrowing costs and a liquidity crunch in DeFi lending markets, the impact is contained to the EarnETH vault. Lido is collaborating with curators and partners to resolve the situation and address any losses or bad debt. Other Earn vaults remain operational, though some face pressure due to current market conditions.