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In today’s episode, we’re breaking down the Kelp DAO exploit and the cascading fallout across DeFi. We unpack how a LayerZero configuration was abused to mint unbacked rsETH, how the attacker used Aave to extract liquidity, and why this turned into DeFi’s first true “bank run” moment.
We discuss:
- Kelp DAO rsETH exploit overview
- LayerZero configuration and RPC attack
- Minting 290m unbacked rsETH
- Bridged assets and blast radius
- Depositing fake collateral into Aave
- How looping and leverage amplified risk
- Aave’s monolithic pool design flaw
- Morpho’s isolated market comparison
- Liquidation mechanics and bad debt
- $10B Aave outflows and bank run
- TVL quality vs headline TVL
- DeFi reputation and permissioned shift
And more—enjoy
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Timestamps:
(00:00) Intro
(02:00) What got exploited
(05:20) Restaking and looping explained
(08:15) LayerZero config vulnerability
(10:08) 290m rsETH minted
(16:10) Depositing into Aave
(18:45) Morpho vs Aave design
(24:30) Governance responsibility debate
(28:40) LayerZero network scale
(34:55) $10B Aave outflows
(41:00) DeFi reputation hit
(52:00) TVL quality discussion
(56:24) Outro
—
NEW: Join the Indexed Pod group chat:
https://t.me/+Jmox7c6mB8AzOWU0
Timestamps:
(00:00) Intro
(02:00) What got exploited
(05:20) Restaking and looping explained
(08:15) LayerZero config vulnerability
(10:08) 290m rsETH minted
(16:10) Depositing into Aave
(18:45) Morpho vs Aave design
(24:30) Governance responsibility debate
(28:40) LayerZero network scale
(34:55) $10B Aave outflows
(41:00) DeFi reputation hit
(52:00) TVL quality discussion
(56:24) Outro
—
NEW: Join the Indexed Pod group chat:
https://t.me/+Jmox7c6mB8AzOWU0
And our new website is live:
https://indexedpod.com
—
Follow the co-hosts:
https://x.com/hildobby
https://x.com/0xBoxer
https://x.com/sui414
Follow the Indexed Podcast:
https://x.com/indexed_pod
—
The Indexed Podcast discusses hot topics, trendy metrics and chart crimes in the crypto industry, with a new episode every 1st and 3rd Thursday of the month, brought to you by wizards @hildobby @0xBoxer @sui414.
Subscribe/follow the show and leave a comment to help us grow the show!
—
DISCLAIMER: All information presented here should not be relied upon as legal, financial, investment, tax or even life advice. The views expressed in the podcast are not representative of hosts' employers views. We are acting independently of our respective professional roles.
https://indexedpod.com
—
Follow the co-hosts:
https://x.com/hildobby
https://x.com/0xBoxer
https://x.com/sui414
Follow the Indexed Podcast:
https://x.com/indexed_pod
—
The Indexed Podcast discusses hot topics, trendy metrics and chart crimes in the crypto industry, with a new episode every 1st and 3rd Thursday of the month, brought to you by wizards @hildobby @0xBoxer @sui414.
Subscribe/follow the show and leave a comment to help us grow the show!
—
DISCLAIMER: All information presented here should not be relied upon as legal, financial, investment, tax or even life advice. The views expressed in the podcast are not representative of hosts' employers views. We are acting independently of our respective professional roles.
Creators and Guests
What is Indexed Podcast?
Hi! 👋 We are 3 data nerds here to chat trendy metrics, chart crimes in web3. We hope to bring you deep dive of the topics with data-driven insights, and bring more transparency to the crypto industry! Let us know your opinions under each episode, and the topics you'd like to hear from us!
Follow us on X:
Indexed: https://twitter.com/indexed_pod
Hildobby: https://twitter.com/hildobby
Boxer: https://twitter.com/0xBoxer
Danning: https://twitter.com/sui414
And our website: indexedpod.com