KelpDAO rsETH Theft Could Speed DeFi's Move Toward Modular Lending; LayerZero Seen Ceding Cross-Chain Share

Huo Xing Finance reported that on April 19, crypto KOL benmo.eth said the rsETH theft tied to KelpDAO could have broad ripple effects, with KelpDAO and LayerZero disputing where responsibility lies. He outlined several potential outcomes: • Wrapped assets such as LRTs should not be assumed to carry the same security profile as native assets. Lending protocols are advised not to treat them as equivalent collateral within mixed collateral pools. • LayerZero could lose part of its cross-chain market share. Assets including usde and usd0 have already stopped using its cross-chain solution. Even if service resumes, he believes reputational damage will be difficult to repair. • Aave's security reputation has taken a hit, and large holders are again scrutinizing risk in unified lending markets. He argued that each added collateral type introduces incremental risk to existing collateral, creating an imbalance that disadvantages native assets. Aave V4 and modular lending may gain traction as a result, potentially accelerating a broader shift. Market attention may move toward "lending business fundamentals" over specific platforms or curators, with higher operational costs as a trade-off. • The cost of attracting TVL on L2 networks could rise further, potentially pushing some liquidity back to L1. • DeFi may pivot from expansion-first approaches to a more conservative security posture, while also contending with emerging AI-driven security threats such as Anthropic Mythos.