Is DeFi dead? The biggest bank run in history
In today’s episode, we’re breaking down the Kelp DAO exploit and the cascading fallout across DeFi. We unpack how a LayerZero configuration was abused to mint unbacked rsETH, how the attacker used Aave to extract liquidity, and why this turned into DeFi’s first true “bank run” moment.
We discuss:
Kelp DAO rsETH exploit overview
LayerZero configuration and RPC attack
Minting 290m unbacked rsETH
Bridged assets and blast radius
Depositing fake collateral into Aave
How looping and leverage amplified risk
Aave’s monolithic pool design flaw
Morpho’s isolated market comparison
Liquidation mechanics…
The skinny
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