The total price locked on the Aave lending platform is dropping after hackers exploited KelpDAO’s cross-chain rsETH arrangement, with LayerZero saying the initial signs point to North Korea’s Lazarus Group.
LayerZero he says KelpDAO spent about $290 million on April 18 and describes the attacker as “the highest level player in the state,” possibly linked to the Lazarus Group and its TraderTraitor group.
In its statement, LayerZero says that the incident was limited to KelpDAO’s rETH and did not spread to other resources or protocol implementations.
According to blockchain tracker LookonChain, this exploit resulted in approximately $292 million of rETH being illegally generated. The attacker then used the token as collateral to borrow more than 82,600 Ether (ETH), worth about $195 million, from Aave.
LookonChain says that this bad debt caused a large withdrawal from Aave, which caused its TVL to fall by $6.28 billion in less than 48 hours, from $26.396 billion to $20.114 billion.
It says the main withdrawals include $431 million from MEXC, $405.7 million from the wallet 0x7CD0, linked to Nonco, and $392 million from Abraxas Capital.
LayerZero says the attack targeted the underlying RPC used by the Decentralized Verifier Network instead of the LayerZero protocol itself, adding that the compromised nodes were replaced and the verification network was back online.
Aave moved to the rsETH markets on V3 and V4 to prevent additional lending and deposits while evaluating ways to offset any shortfall.
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