The Chopping Block: Kelp DAO Hack Fallout, DeFi Socialized Losses & Arbitrum’s “Reverse Hack”

Unchained

Laura Shin

News, Business News, Tech News

4.6 • 1.3K Ratings

🗓️ 23 April 2026

⏱️ 62 minutes

🔗️ Recording | iTunes | RSS

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Summary

The Chopping Block crew and guest Monet Supply break down the $200M Kelp DAO bridge exploit, finger-pointing between LayerZero, Kelp DAO, and Aave, the wild “reverse hack” Arbitrum bailout, and what it all means for DeFi lending protocol risk, L2 trust, and the future of socialized losses in crypto. Welcome to The Chopping Block — where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest in crypto. This week, we’re joined by Monet Supply, DeFi governance OG and current Spark brain, for a front-row seat to crypto’s hack-of-the-week: the $200M “Kelp DAO—LayerZero—Aave” debacle. If you thought DeFi risk was just about liquidations, buckle up. The team untangles the hack mechanics, the musical chairs of collateral across bridges and lending markets, and—most importantly—the prime time blame game: is it LayerZero’s fault for running a single-signer bridge, or did Kelp DAO or Aave drop the ball? We dive deep into the “socialized losses” mess facing Aave depositors (especially on L2s), unpack Arbitrum’s extraordinary move to confiscate coins back from North Korea (yes, really), and debate whether rollups can—or should—aspire to Ethereum’s censorship resistance. Finally, the squad discusses concrete remediation: rate limits, portfolio triage on risky collaterals, and the meta-game of DeFi crisis response. If you want the blunt, unfiltered, and occasionally spicy take on DeFi’s latest chaos, let’s get into it. Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform. Show highlights 🔹 Kelp DAO bridge exploit: $200M minted, North Korea fingered, DeFi lending protocols left holding the bag 🔹 Why LayerZero’s single-validator bridge design was a disaster waiting to happen 🔹 The Spider-Man meme comes to DeFi: KelpDAO, LayerZero, and Aave point fingers 🔹 Aave’s socialized losses headache: who eats the bad debt, L1 vs L2 depositors 🔹 Arbitrum’s Security Council “reverse hack” to claw back stolen ETH—feature or bug? 🔹 DeFi lending protocol design flaws, cascading risks, and pooled markets explained 🔹 Remediation: rate limits, fewer LRTs, and the “surface of death” in risk management 🔹 Rollups & L2s: why “Ethereum with training wheels” isn’t always the goal 🔹 What this week means for DeFi precedent, governance, and future hacks 🔹 DeFi’s growing pains: market demands bailouts, but who should actually pay up? Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Tom Schmidt, General Partner at Dragonfly Guest ⭐️ Monet Supply, Head of Strategy at Spark Disclosures Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Users should be responsible for the fact that like I was lending my Ethan Ave, like the risk is that you lose some of your money if one of the collateral scopes bad, but just pooled lending markets are not really, they're not configured in a way where they can handle this sort of like loss event gracefully.
0:15.9	Like they either get recapitalized and everything's fine or they fail catastrophically and everyone loses all their money.
0:22.8	Not a dividend. It's a tale of two con. Now, your losses are on someone else's balance.
0:27.9	Generally speaking, air drops are kind of pointless anyways. I'm in trading firms who are very involved.
0:33.5	I like that eight of the ultimate policy. D5 protocols are the antidote to this problem.
0:39.3	Hello, everybody. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider's perspective on the crypto topics of the day.
0:45.7	Quick intro is just you got Tom, the defy maven and master of memes.
0:48.9	Hello, everyone.
0:50.6	Next to you got Tarun, the gigabrain, and Grand Puba at Gotlet.
0:54.0	Yo. Joining us today, we have Puba at Gotlet. Yo.
0:55.7	Joining us today, we have special guests Monet Supply, the governance guru at Spark.
1:01.5	Hello.
1:03.3	And I am Haseeb, the head hype man, at Dragonfly.
1:05.9	We're early-station investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see chopping block that XYZ for more disclosures.
1:14.5	Gentlemen, it has been an insane week. Turns out this is the biggest hack all week.
1:19.4	There's a second hack after the drift hack that we saw the previous week. Now, there's a massive
1:24.3	hack called Kelpdow. Now, Kelpdow, I had no idea what Kelpdao was until literally this week. But turns out it is deeply interconnected into almost everything in Defi. So we have brought on Monet Supply. Monet Supply, you are a DeFi governance OG, one of the OGS of OGs. Very briefly for the audience, can you describe for us what your background is what
1:44.8	you've lived through in defy and explain to us what happened here with the kelpdow hack yeah yeah
1:50.1	happy to um so i landed in uh the defy space in 2020 on the back of a few years previously in
1:57.4	traditional finance and originally i kind of like posted my way into a job with MakerDAO by just kind of
2:04.2	posting in their governance forums.
2:07.0	And then the rest is history.
	...

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