rsETH Security Incident Causes Significant ETH Market Impact

On May 18, 2026, on-chain analyst Tom Wan reported a significant decline in Ethereum (ETH) utilization following the rsETH LayerZero cross-chain bridge attack. The ETH utilization rate has fallen below 90%, with lending annual percentage yields (APY) dropping to 1.9%. The attack has resulted in a loss of approximately $1.2 billion in wstETH deposits and $1.76 billion in weETH deposits. As the strategy of leveraging wstETH/weETH against ETH becomes profitable again, market focus is shifting to the potential recovery of demand for ETH leveraged loops. Investors are currently hesitant, with capital either remaining on the sidelines or moving towards alternative protocols like Spark and Morpho.

Key Points: • ETH utilization rate dropped below 90% following the rsETH bridge attack. • Deposits of wstETH and weETH decreased by approximately $1.2 billion and $1.76 billion, respectively. • Market interest is shifting towards the recovery of ETH leveraged loops amidst falling lending APY.