Cardano founder, Charles Hoskinson, used his most recent live stream to say roughly that KelpDAO exploit worth $292 million This wasn’t just another bridge failure, but a broader warning about how Ethereum’s rebuilding, cross-chain messaging, and lending stack can turn a single settlement into a system-wide infection.
In Hoskinson He saysThe April 18 attack exposed what he sees as the most vulnerable part of modern DeFi: not necessarily application-level smart contracts, but the layers of verification and interdependence that exist between protocols. He said the exploit, which involved about 116,500 rsETH drained from KelpDAO’s Ethereum collateral, should force a broader conversation in the industry about bridge trust assumptions, the design of validators, and the speed at which bad collateral can spread across lending markets.
Cardano Founder Warns There’s a Serious Flaw at the Heart of Ethereum DeFi
Instead of filing a standard post-mortem, Hoskinson said he took internal incident report material and used artificial intelligence to turn it into a website that walks viewers through the mechanics of the exploit. This structure made its biggest point: the failure, as he described it, did not start with broken node accounts within KelpDAO itself; Nor with LayerZero’s obvious accounting flaw. Instead, he said it focused on a forged on-chain message that was accepted as legitimate and allowed funds to be released on Ethereum.
“So, this wasn’t a smart contract issue with Kelp and it wasn’t a smart contract issue with LayerZero, but it was a forged cross-chain message,” Hoskinson said. “So this was something new and different.”
The Cardano founder returned time and again to one design choice in particular: the reported use of a one-of-one validator configuration. In his explanation, best practice would be a multiple validation model like three out of five, but the KelpDAO setup is based on one active DVN. This created an unacceptable single point of failure in a system already filled with layers of backlogs, re-protocols, bridges and lending venues, he said.
He said: “The failure was in the verification logic, not the application logic.” “Kelp did everything right according to their contracts. They were audited. They work well. The application works well. It’s a bridge configuration.”
Hoskinson also stressed that the industry still lacks a consistent account of where exactly responsibility lies.
According to his summary, three separate root cause analyzes emerged after the exploit: one from LayerZero, one from KelpDAO, and one linked to LlamaRisk and Aave governance discussions but none of them fully agreed. This leaves it open whether the break occurred at the messaging layer, the validator setup, the KelpDAO acceptance logic, or at the layers in between.
What made the event particularly significant, in his opinion, was not only the robbery itself, but what happened afterward. Instead of dumping the stolen rsETH on decentralized exchanges, the attacker allegedly used it as collateral on lending markets to borrow more liquid assets. This turned the exploit into a balance sheet problem for other protocols, leaving behind what Hoskinson described as toxic safeguards.
He described that dynamic as the true novelty of the incident. “It wasn’t just a bridge hack. It spread to lending which then created a bad debt contagion within those lending protocols. It led to a run on the banks and we saw $13 billion taken out of TVL in a very short period of time for a $290 million hack.”
The Cardano founder said the broader DeFi liquidity shock reached far beyond KelpDAO itself. Citing public reports referenced in his guidance, he cited at least nine directly affected protocols and said that Aave alone saw losses between $6.6 billion and $8.45 billion, while rsETH traded in a volatile range between about $1,600 and $2,500 in the 24 hours following the attack.
He also raised the possibility of Lazarus’ involvement, although he acknowledged that attribution remains uncertain. “There is a lot of evidence here of connections with Lazarus,” he said, before adding that no independent forensic firm has proven this conclusively.
At the time of writing, Cardano (ADA) was trading at $0.2504.
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