Aave TVL tumbles to $14.3B
- Aave’s total value locked fell to about $14.3 billion this week after the fallout from KelpDAO’s April 18 rsETH exploit triggered a rush of withdrawals across the lending protocol. - Aave’s own incident report said attackers used exploited rsETH as collateral, leaving about $196 million in bad debt, while outside trackers showed TVL sliding from roughly $26.4 billion. - The freeze spread beyond rsETH markets, with Aave and partners now seeking frozen ETH releases and recovery funding through governance. (governance.aave.com) (forum.arbitrum.foundation)
Aave’s locked deposits have fallen to about $14.3 billion after the April 18 rsETH exploit tied to KelpDAO set off a wave of withdrawals. (coindesk.com) (mexc.com) Aave said the incident did not come from a flaw in Aave itself. Its risk team said the problem was scoped to rsETH and began with an external exploit, prompting the Guardian to freeze rsETH and wrapped rsETH markets at 18:52 UTC on April 18. (governance.aave.com) Two days later, Aave’s incident report said the attacker had used exploited rsETH as collateral to borrow real assets, leaving the protocol with about $196 million in bad debt. (governance.aave.com) Market trackers and crypto news outlets then documented the run on deposits. DefiLlama-based reports cited by CoinDesk and others showed Aave’s TVL dropping from roughly $26.4 billion on April 18 to near $20 billion within days, then sliding further toward $14.3 billion. (coindesk.com) (unchainedcrypto.com) (mexc.com) The crunch also hit borrowing markets. Circle’s chief economist, Gordon Liao, entered Aave governance this week with a proposal after USDC utilization on parts of the protocol climbed near 100% and users struggled to withdraw. (beincrypto.com) (msn.com) Aave users and service providers have argued over whether this was a solvency problem or a liquidity problem. Governance posts described a protocol still operating, but with frozen markets, trapped suppliers on some networks, and a widening hole as Ether’s price moved. (governance.aave.com 1) (governance.aave.com 2) The recovery effort is now moving into formal votes. Aave, KelpDAO, LayerZero, EtherFi and Compound-backed authors asked Arbitrum governance on April 25 to release 30,765.67 ETH frozen by the Arbitrum Security Council for a coordinated rsETH recovery plan. (forum.arbitrum.foundation) That leaves Aave in a familiar DeFi position: the protocol code kept running, but confidence did not. The next test is whether governance can refill liquidity faster than users keep pulling it out. (governance.aave.com) (coindesk.com)
