Lido Finance has paused its EarnETH vault and activated $3 million in first-loss protection following the recent $292 million exploit of KelpDAO's rsETH token. This incident marks the largest crypto hack of the year, triggering emergency market freezes and impacting decentralized finance total value locked across multiple protocols.
The EarnETH vault, holding approximately $21.6 million, is now closed to new deposits and withdrawals. While Lido's core stETH and wstETH staking protocols remain unaffected, the exploit underscores persistent vulnerabilities in cross-chain bridges and DeFi counterparty relationships.
Crypto markets appear to have largely priced in this event, with prediction markets showing 100% odds for another hack exceeding $100 million by year-end. Attention is now focused on whether further incidents will occur and how protocol responses, such as Lido's vault pause, can mitigate contagion effects.