The War Room Notes: Running Katana Through DeFi’s Worst Week Since FTX

By Matthew Fisher, CEO, Katana “DeFi is not dead. DeFi is United.” is the rallying cry following the resolution of the $292 million Kelp exploit on April 19 that renewed the spotlight on DeFi’s most seasoned enemy: Lazarus Group, whose estimated 2025 earnings of $1.5bn account for a few percent of North Korea’s GDP. AI companies had to learn that they weren’t just building software – they were building systems with real-world consequences. The regulatory and reputational pressure that followed changed how the best ones operated. DeFi is having the same reckoning, faster, and without a regulatory forcing function. It has to come from the founders. Beyond recovery funds, we need to unite on baseline security requirements that allow institutions to underwrite the risk of interacting on-chain. DeFi’s composability is a blessing and a curse. Whether it’s through technical security failures or governance attacks, sometimes all it takes is one piece of infrastructure to fail and trigger cascading liquidity stress tests across the entire ecosystem. The transparency in DeFi makes these events public, and the settlement finality makes it near instant. TradFi credit markets, on the other hand, are resolved over months, with covenant renegotiations and off-chain legal recourse handled privately. By Sunday April 19th, public announcements circulated that KelpDAO had lost $292 million to an attack on its LayerZero bridge. Lending markets from Aave to Spark to Fluid were frozen, and the entire industry was staring at the same question: what’s actually still standing? To find an answer to that, we need to look back at what those 72 hours really looked like from inside Katana. The easy call By 3:30 PM EST Saturday, most of the team was monitoring the situation. And by 7 PM EST Saturday, our security team had paused LayerZero integrations across our stack out of an abundance of caution. We don’t use 1/N DVNs in our LZ operations, but we paused anyway. That was before anyone outsid...