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Guavy AI Editorial Team••Sentiment: -3•Clout: 72

Aave's TVL Plummets Following Kelp DAO Exploit

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A recent cyber attack on Kelp DAO has had far-reaching consequences for the decentralized finance (DeFi) market. The exploit, which saw hackers steal $293 million worth of rsETH tokens, led to a significant decline in Aave's total value locked (TVL).

The TVL drop from $26.4 billion to $18.6 billion is estimated to have wiped out nearly $8 billion in locked assets, causing Aave to lose its position as the largest DeFi protocol.

The attack began when hackers stole 116,500 rsETH tokens from Kelp DAO's LayerZero-powered bridge. The stolen tokens were then used as collateral on Aave v3 to borrow wrapped Ether (wETH), leaving Aave exposed to approximately $195 million in bad debt.