Reserve Pauses eUSD and USD3 Minting and Rebalancing After Kelp DAO LayerZero Bridge Exploit

Reserve said on April 20 that it is monitoring the LayerZero bridge exploit affecting Kelp DAO, and currently believes holders of Reserve DTFs are unlikely to face material impact. The platform noted that if mainnet rsETH were to see a sharp devaluation—potentially requiring a 15.5%–18.5% writedown—Aave could end up with bad debt, which could then pressure USDC collateral within Aave V3. Reserve added that RSR stakers backing the USD3 and eUSD protocols may serve as first-loss capital, but any effect is expected to be limited because RSR is sufficiently overcollateralized to absorb losses. Reserve also stated that ETH+ and bsdETH have no rsETH exposure and therefore carry no associated risk. As a precaution, the company has temporarily halted eUSD and USD3 minting and rebalancing, along with RSR unstaking. Redemptions remain fully available, and users who want the benefit of RSR overcollateralization protection are advised to keep their positions.