Lido: EarnETH Slashed by around 9% Due to KelpDAO Incident, stETH and wstETH Unaffected

BlockBeats News, April 23rd, Lido has provided the latest update on the KelpDAO security incident, stating that its Earn series vault is collaborating with the management team to address the issues, involving the risks of rsETH exposure and lending market liquidity crunch. The core staking protocol remains unaffected, and both stETH and wstETH are not impacted. Currently, only the EarnETH vault has approximately a 9% TVL exposure to rsETH, and related deposits and withdrawals have been temporarily paused by the management team awaiting a resolution.

Approximately $70 million of ETH has been recovered from the previous attack, and efforts are ongoing regarding asset recovery and loss distribution. To address liquidity pressure, the management team has reduced leverage and optimized their position structure, significantly decreasing the wETH debt exposure. If any losses ultimately occur, EarnETH will activate a $3 million "first loss protection mechanism" (backed by the DAO). As for other vaults, DVV and EarnUSD remain unaffected and are operating normally; the GGV sub-vault is currently experiencing negative returns due to a combination of a yield farming strategy and increasing borrowing rates, but adjustments are being made. Withdrawal requests submitted by users prior to the incident will be processed based on pre-incident valuations.