> For the complete documentation index, see [llms.txt](https://tau-labs.gitbook.io/vault-dashboard/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://tau-labs.gitbook.io/vault-dashboard/tau-risk-framework/stress-events.md). # Stress Events {% updates format="full" %} {% update date="2026-05-08" %} ## rsETH Exploit {% hint style="info" %} No direct losses for TAU vaults {% endhint %} On April 18, 2026, an attacker exploited KelpDAO's LayerZero bridge, stealing 116,500 rsETH. The exploiter compromised two RPC nodes that KelpDAO's LayerZero 1-of-1 DVN bridge relies on for the Unichain to Ethereum path for rsETH. As a reaction, lending markets froze rsETH and WETH. Utilization rates, and therefore borrow rates spiked. In the end, DeFi United was able to raise capital to make users whole and prevent any losses. #### TAU's response * **No direct exposure**: At the time of the exploit, TAU Labs vaults had no direct exposure to rsETH * **Immediate market audit**: Our team conducted a comprehensive audit of all assets our vaults were exposed to, checking for potential indirect exposure to rsETH. * **Knock-on effects**: As liquidity dried up, unaffected markets saw spikes in borrow rates, which turned the APY for TAU's Ethena Loop on Aave negative. After careful consideration of the tradeoffs (slippage of exiting vs duration of negative APY), we decided to keep the loop running while increasing the exit fee to adjust to the new slippage regime. This allowed depositors to actively exit the loop without socializing a loss from slippage across the remaining depositors. Full writeup [here](https://x.com/628Labs/status/2046526891193225589). {% endupdate %} {% update date="2026-03-22" %} ## Resolv Exploit {% hint style="info" %} No losses for TAU vaults {% endhint %} #### What happened On March 22, 2026, the Resolv Protocol suffered a significant security breach resulting in the theft of approximately $23 million in assets. An attacker gained unauthorized access to Resolv's privileged signing keys. By controlling these keys, the exploiter bypassed the off-chain authorization process to mint tens of millions in unbacked USR stablecoins. These tokens were then swapped into ETH and other stablecoins. The sudden influx of unbacked supply caused the USR stablecoin to depeg, hitting a low of $0.20 on some secondary markets. Users also came in to buy cheap USR on DEXs and lend against them on money markets which still hardcoded USR's value at 1$. #### TAU's response * **No direct exposure**: At the time of the exploit, TAU Labs vaults had no direct exposure to any Resolv assets (USR, RLP) * **Immediate market audit**: Our team conducted a comprehensive audit of all assets our vaults were exposed to, checking for potential indirect exposure to Resolv assets. * **Withdrawal**: upUSDC informed about its 6% exposure to RLP via loans outstanding against RLP collateral. The TAU lending optimizer had a 15% USDC allocation to the upUSDC/USDC Morpho market. While an LLTV of 91.5% made bad debt unlikely, TAU withdrew its funds to protect depositor capital * **Knock-on effects**: As liquidity dried up, unaffected markets saw spikes in borrow rates, which turned the APY for TAU's loop strategies negative. We delevered one strategy which normalized rates within a day. {% endupdate %} {% update date="2025-11-03" %} ## Stream Finance Insolvency {% hint style="info" %} No losses for TAU vaults {% endhint %} #### What happened On November 3rd, 2025, Stream Finance disclosed a $93 million loss related to its "stablecoin"/yield vault **xUSD**, 25% of the reserves. An external fund manager suffered catastrophic losses during the market volatility of mid-October. As news broke, xUSD redemptions were immediately paused. With no primary exit, xUSD plummeted on secondary markets, dropping to $0.88 within hours. Many "Yield Loop" strategies had used xUSD as collateral to borrow "Blue-Chip" stablecoins like USDC. As xUSD lost value, these positions hit liquidation thresholds. Because xUSD liquidity was thin, liquidators couldn't easily swap seized xUSD for the borrowed assets, leading to massive slippage, "bad debt" in lending protocols, and a total collapse of TVL in affected vaults. The total direct debt to lenders on lending markets is estimated around [$285m](https://x.com/yieldsandmore/status/1985571764441579649). #### TAU's response * **No exposure**: TAU vaults never had any direct or indirect exposure to xUSD as our risk framework filtered it out in June 2025. * **Knock-on effects**: As liquidity dried up, unaffected markets saw spikes in borrow rates, which turned the APY for TAU's loop strategies negative. We delevered strategies to protect depositor principal. {% endupdate %} {% endupdates %} --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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