Lido Suspends EarnETH Vault, Triggers $3M First-Loss Backstop After Kelp rsETH Exploit

Lido has paused activity in its EarnETH vault following the exploit involving KelpDAO's rsETH token, according to CoinDesk. The protocol also activated a $3 million first-loss protection mechanism intended to cushion any potential hit tied to the incident. Traders appear to have largely priced in the roughly $292 million attack on rsETH, described as the year's largest hack. The event triggered an immediate market freeze and pushed total value locked (TVL) lower across nine DeFi protocols reportedly impacted. Lido said deposits and withdrawals for EarnETH have been halted. The vault is said to hold about $21.6 million that could be exposed. Lido added that its stETH and wstETH staking products are not affected. The episode underscores persistent risk around cross-chain bridges and DeFi counterparty dependencies—areas cited as central to the vulnerability used in this exploit. Looking ahead, the brief notes that with outcomes framed as fully priced at 100% probability, the market offers little room for speculative upside. Attention is shifting to whether similar incidents emerge before December 31 and how containment measures may limit broader fallout. On-chain investigator ZachXBT and security firms including Chainalysis and CertiK are monitoring exploitation patterns and vulnerability disclosures, which could shape future pricing across related markets.