Pluto (Harbor) on the fate of DeFi after KelpDAO (EP.717)
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All right. I'm sitting down with Pluto. Pluto worked on one of the very first DEXs, Air Swap, and then worked at Nine Realms, which was a Thor chain development company, and then is now working on something new called Harbor, which we'll talk about. But the purpose of today's conversation is to do a little postmortem on the Kelp DAO hack, all of the unhinged nonsense that went around there. And then I think really, a lot of people are having this kind of come to Jesus moment with DeFi, where there's a lot of soul searching and we're wondering, is there a point to still doing DeFi? A lot of peo
No, I think that about covered it. Been a very interesting long journey, but I'd just say like, yeah, my expertise is in crypto infrastructure and specifically cross chain, which I feel like some of the vectors in this particular exploit kind of touched on with the involvement of LayerZero's bridge and DVNs and basically cross chain bridging specifically.
Yeah. I think you actually have a fantastic resume when it comes to diagnosing these problems. And it's cool that there's at least one person that's still optimistic about this space and still building it. It's nice to see. All right, so Kelp DAO. I'd never heard of Kelp DAO. I always kind of like vaguely thought restaking was a bad idea, but without knowing specifically why. All these layered derivatives give me the heebie jeebies. And actually what happened reminds me a lot of the reserve mutual, the money market mutual fund breaking the buck around the time of, when it full of layman commer
Yeah, absolutely. So I'll start by saying that, you know, I'm not an expert on Aave in particular. Aave just happened to be part of the blast radius of this particular attack. But one of the reasons why people want to exploit bridges is because there's value on one chain, and you can possibly use that bridge to then mint or unlock value on a different chain. So in this particular case, what the attackers were really after was ETH or RS ETH on Ethereum main net, where the actual Aave markets lived, all of this TVL that they could access and drain using this inflated collateral or this minted co
And how was it monetized in the end?
It was monetized in the end by using that 116,000 RSEETH on the Ethereum main net side to basically open loans and use as collateral to then withdraw other assets through Aave markets.
So this is actually not an uncomp I feel like we've seen many hacks like this in the past, right? Specifically focusing on these cross chain bridges or portals.
Yeah. It's a combination of getting the bridge to then spoof a very, very large amount of value on a different chain and then using that chain, the different liquidity sources where in this case, the lending market for RSEETH was the main liquidity source. If they had if there was a large Uniswap pool for RSEETH to ETH, for example, they would have just swapped that spoofed RSEETH to ETH and then bridge that out to Bitcoin via any other platform which you probably know where this is going. But yeah, we can talk about that later.
And I mean, this is only gonna get worse. I mean, it's not like these hacks are gonna get any less sophisticated. I mean, like any idiot now can sort of launch elementary style phishing or so like presumably the really sophisticated guys are just going to get better.
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