BEARISH 📉 : rsETH exploit leaves Aave $200M bad debt, TVL drops $6.6B
Bridge exploit leaves Aave with ~$196M in bad debt and a ~$6.6B TVL exodus. Attackers funneled $292M in stolen rsETH via Kelp’s bridge into Aave V3. [AAVE] is down ~23% since Friday.
Aave’s code wasn’t hit. The risk came from collateral. Aave had whitelisted rsETH, so deposits couldn’t be refused in real time.
Bad debt sits around $196M, mainly in the rsETH–wrapped ether pair on Ethereum. Utilization spiked to 100%, making repayments and withdrawals harder and fueling outflows.
TVL fell by roughly $6.6B as users ran for liquidity. This is the confidence shock lending markets fear most, even without a contract failure NewsBTC analysis on lending runs.
On-chain confirms the sell pressure. Aave exchange reserves on spot venues jumped, a pattern that signals distribution by holders moving to sell. CryptoQuant flags the spike as AAVE dropped toward ~$91 while reserves soared.
Scale helps, but size can’t fix collateral integrity. Aave stays DeFi’s largest lender by TVL, yet this episode shows dependence on the assets it accepts.
Key watch now is pace of bad debt resolution and whether TVL stabilizes. If utilization stays high and confidence slips, a second wave of exits is possible over the next 48–72 hours.
Technicals remain heavy. The downtrend from late 2025 stands. The bounce was sold at $110–$115. Price is back near $90 support. Repeated tests weaken that floor. A constructive shift needs a reclaim of $110 and closes above short MAs.