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A $300 Million Borrowing Spike on Aave Signals Liquidity Crunch After KelpDAO Exploit
The exploit forced Aave to halt rsETH trading and left the protocol with about $196 million in bad debt, according to the report.
- The $292 million Kelp DAO exploit landed hardest at Aave, DeFi's largest lending protocol, triggering a $6.6 billion TVL collapse after an attacker generated $196 million in bad debt.
- After depositing 116,500 stolen tokens into Aave V3 as collateral on April 18, the attacker borrowed substantial wrapped ETH against it, causing Aave's native token to fall 16% on the news.
- Aave froze markets to prevent additional collateral deposits, while SparkLend, Fluid, and Lido Finance restricted activity; Ethena shut down LayerZero OFT bridges as a precaution despite no direct exposure.
- Contagion fears spread as the total value locked across the DeFi sector fell 7% in 24 hours to $86 billion, per The Block, while Aave's TVL collapsed from $26.4 billion to nearly $20 billion by Sunday morning.
- Founder Stani Kulechov confirmed Aave's smart contracts were not compromised, yet uncertainty persists as the protocol will "explore paths to offset the deficit," potentially requiring stakers to absorb residual losses.
24 Articles
24 Articles
Aave could face up to $230m in losses after Kelp DAO bridge exploit triggers DeFi chaos
The report, published on the Aave governance forum, outlines two possible outcomes, around $123 million in losses if damage is shared across all rsETH, or up to $230 million if confined to Layer 2s, with the final impact depending on how Kelp DAO allocates the shortfall.
Aave’s TVL Tanks $6.6 Billion as Kelp DAO Hack Sparks Bad Debt and Structural Fears
The fallout from the $292 million Kelp DAO exploit landed hardest at Aave, DeFi’s largest lending protocol. After draining Kelp’s bridge on April 18, the attacker deposited the 116,500 stolen rsETH into Aave V3 as collateral and borrowed substantial amounts of wrapped ETH against it, saddling the protocol with an estimated $196 million in bad debt. Amid contagion fears, Aave’s total value locked collapsed from $26.4 billion on April 18 to nearly…
AAVE Price Plummets By 26%: $9 Billion Net Outflows Traced To Kelp DAO Hack
A $292 million hack tied to restaking protocol Kelp DAO has rippled through decentralized finance (DeFi) lending and market confidence far beyond the original incident, with Aave emerging as one of the hardest-hit examples. Over the weekend, Aave’s native token (AAVE) fell by about 26%, while the protocol also saw a sharp decline in total value locked (TVL) and continued outflows that intensified the downturn. Kelp DAO Hack Sparks Aave Crisis T…
KelpDAO exploit exposes $290M in unbacked assets, AAVE freezes rsETH markets
The exploit raises concerns about DeFi's collateral integrity, potentially prompting regulatory scrutiny and impacting Ethereum's market stability. The post KelpDAO exploit exposes $290M in unbacked assets, AAVE freezes rsETH markets appeared first on Crypto Briefing.
The Decentralized Loan Protocol Aave faces one of the most pressing episodes in its recent history. An exploit linked to Kelp DAO and LayerZero’s cross-chain messaging system has triggered a scenario of uncertainty that could result in losses of up to $230 million, depending on how the generated deficit is managed. The incident not only tests Aave’s resilience, but also exposes structural risks in the decentralized finance architecture (DeFi), p…
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