Lido Says EarnETH Vault Had 9% rsETH Exposure; About $70M in ETH Recovered After Kelp Exploit

Lido has detailed its exposure to the Kelp-related incident, saying the issue was confined to a single product: the EarnETH vault. The affected rsETH position represented roughly 9% of that vault's total value locked (TVL), while the broader Lido staking protocol was not involved. Lido added that remediation work has already recovered about $70 million in ETH associated with the attack. According to Lido, the incident created two separate challenges for Lido Earn vaults: direct exposure to rsETH in EarnETH, and tighter liquidity across lending markets that pushed borrowing rates higher and increased costs for leveraged looping strategies. Lido emphasized that stETH and wstETH remain unaffected. As the review continues, the EarnETH curator has paused new deposits and withdrawal processing while working on both asset recovery and managing lending-market stress. Lido said the Arbitrum Security Council was able to recover around $70 million in ETH linked to the exploit. Lido Labs has also proposed contributing up to 2,500 stETH, valued at about $5.8 million, to help reduce the rsETH deficit created by the exploit. The proposal specifies the contribution would only be made as part of a fully funded recovery package. Beyond the rsETH position, EarnETH includes looping strategies that were hit by the rise in borrowing rates. Lido said the curator has been reducing leverage and adjusting the vault's holdings, including a significant cut in wETH-denominated debt, to better manage elevated borrowing costs. Lido expects to provide additional updates, and said it may introduce an alternative withdrawal path if the resolution takes materially longer than anticipated and withdrawals remain paused. Lido also highlighted a first-loss protection mechanism tied to EarnETH. If the vault ends the recovery and resolution process with a loss, a $3 million buffer funded by the Lido DAO treasury would be applied by burning the DAO's vault shares, placing DAO-funded capital ahead of users. Any use of the buffer will depend on the final recovery outcome and loss allocation. Other Lido Earn products continue operating. Lido said DVV, GGV and EarnUSD have no exposure to Kelp's rsETH. It added that DVV and EarnUSD are not exposed to the current lending-market liquidity stress, with deposits, withdrawals and rewards continuing unchanged. The GGV subvault does have exposure to looped staking strategies, and the sharp increase in borrowing rates has pushed it into negative yield territory, with curators taking ongoing actions.