BEARISH 📉 : Kelp DAO hack leaves Aave with $280M bad debt, $9B outflows
Kelp DAO’s bridge exploit spilled into Aave. The attacker posted stolen rsETH, borrowed WETH, and triggered a liquidity squeeze.
- 116,500 rsETH stolen via LayerZero, ~$292M
- ~$236M WETH borrowed on Aave V3
- ETH pool hit 100% utilization
- $9B net outflows since Saturday, TVL ~$17.5B
- AAVE down ~26% to ~$88, 86% below ATH
Per Coin Bureau, the exploiter drained about 116,500 rsETH (~$292M) from Kelp DAO’s LayerZero bridge, then used the tokens as collateral on Aave V3 to borrow roughly $236M in WETH according to this post.
As rsETH became effectively unbacked, those collateralized positions can’t be liquidated. The borrowed funds remain stuck in the lending system same source.
Aave’s ETH pool reached 100% utilization, leaving little ETH for withdrawals. Users face pool-level liquidity limits as a result NewsBTC report.
Withdrawals accelerated. “Withdraw first, ask questions later,” said portfolio manager Pratik Kala, comparing the rush to a bank run Bloomberg.
Since Saturday, Aave recorded about $9B in net outflows. TVL fell by more than a third to roughly $17.5B Bloomberg.
Token performance mirrored the stress. AAVE traded near $88 on Monday, down ~26% from Friday’s ~$118. It sits about 86% below its $661 all‑time high CoinGecko data.
Aave froze rsETH markets to limit further risk. The team said rsETH on Ethereum remains fully backed, but kept restrictions in place as a precaution Aave update.
