Lido says only about 9% of EarnETH’s TVL is tied to hacked rsETH, roughly $70M has been recovered, and a $3M DAO first‑loss buffer stands between users and any final hit.
Summary
- Lido says roughly 9% of its EarnETH vault’s TVL is exposed to hacked rsETH, but its core staking protocol remains unaffected.
- Around $70 million in ETH has been recovered so far, and a $3 million DAO-funded first-loss buffer is available if users ultimately face losses.
- Other Earn vaults are operating normally, though one sub‑vault is under pressure from circular staking strategies and higher lending rates.
Lido has outlined the fallout from the KelpDAO rsETH exploit, stressing that the incident is contained to its leveraged Earn vaults and that its flagship staking products stETH and wstETH “remain unaffected” and “safe and stable.” The Kelp cross‑chain bridge hack on April 18 drained about 116,500 rsETH — roughly $292 million — and forced multiple DeFi protocols to freeze rsETH markets, including Lido’s EarnETH product.
According to Lido, only the EarnETH vault has direct rsETH exposure, representing around 9% of its total value locked — approximately $21.6 million via a leveraged rsETH/ETH position on Aave. Deposits and withdrawals for EarnETH have been paused by the vault’s managers while they work with Kelp, LayerZero, and lending protocols to determine how any losses or bad debt will be allocated.
9% rsETH hit, $70M recovered, first-loss buffer
The team said that about $70 million worth of ETH linked to the broader exploit has already been recovered, with additional asset recovery and loss-distribution talks still in progress. In parallel, EarnETH managers have “reduced leverage and optimized the position structure,” significantly cutting the vault’s wETH debt exposure to ease liquidity pressure in stressed lending markets.
If there is a residual loss once recovery efforts are complete, EarnETH can tap a $3 million “first-loss protection mechanism” funded by the Lido DAO treasury. That buffer, part of a $5 million DAO allocation approved in March, is designed so that DAO-owned vault shares absorb losses before they hit other depositors, effectively putting LDO governance capital in front of users in a downside scenario.
Other vaults steady, GGV under pressure
Lido added that its DVV and EarnUSD vaults are not exposed to rsETH and continue to operate normally. A GGV sub‑vault, however, is currently showing negative returns because it combined circular staking strategies with rising on‑chain lending rates, a mix that has become more expensive and less sustainable in the current environment.
Managers say they are actively rebalancing GGV’s positions and adjusting strategy parameters, while withdrawal requests across the Earn suite will be processed using valuations from before the Kelp incident to keep treatment consistent during the review period. Lido reiterated that the rsETH issue “does not involve the Lido staking protocol itself,” underscoring the separation between its experimental Earn products and the core liquid staking infrastructure that underpins stETH and wstETH across DeFi.
