According to crypto industry executives and blockchain security firms, Kelp Liquid’s use of the restaking protocol shows how non-segregated lending and integration in decentralized finance (DeFi) could lead to a broader ecosystem infection.
According to Michael Egorov, founder of the Curve Finance DeFi protocol, non-segregated lending on DeFi platforms, including older versions of the Aave lending protocol, puts users at risk from all the different tokens used as collateral on the platform.
Kelp was the target of a cyberattack on Saturday, causing the platform to halt smart contracts for its restacking token (rsETH) while it proceeded to investigate the attack, which led to the withdrawal of approximately $293 million from the platform.
Egorov said in an email that DeFi teams should also vet potential digital assets before approving tokens as loan collateral on their platforms to ensure that the token does not have a single point of failure or attack surfaces.
He also warned against using cross-chain bridging architecture to transfer assets from one blockchain protocol to another, which was the root cause of this weekend’s Kelp exploit.
“Cross-chain is difficult and potentially risky. Use cross-chain infrastructure only when absolutely necessary, and do it really carefully,” Egorov said.
He said the incident is a learning experience for DeFi that the sector can use to develop and implement better cybersecurity protections as losses from crypto hacks, code exploits, and scams reached $482 million in the first quarter of 2026.
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Kelp exploit triggers “infection” throughout DeFi ecosystem
“This was not just a protocol exploit. It immediately became a cross-protocol contagion event,” blockchain security firm Sievers told Cointelegraph.
Sievers said at least nine DeFi protocols and platforms, including Aave, Fluid, Compound Finance, Sparkland, and Euler, were affected by the incident and took action to freeze RSETH markets or mitigate the impact of the Kelp exploit.
“The challenge now is not just to prevent exploits at the contract level, but to understand how quickly they can spread across integrated protocols,” Cyverse CEO Dedi Lavid told Cointelegraph.
The exploit on Kelp follows the $280 million Drift Protocol decentralized exchange hack last week and the hack of at least 12 other crypto platforms and DeFi earlier this month.
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