Cryptocurrency Market Crisis: Aave Hit by Record ETH Outflows

A security breach in the cryptocurrency market has caused a liquidity shock in decentralized finance (DeFi) protocols. According to data from on-chain analytics platform Lookonchain, the KelpDAO exploit resulted in 'bad debt' on Aave after an attacker withdrew ETH using rsETH collateral.

This triggered panic selling among large investors, leading to over $5.4 billion worth of ETH being withdrawn from the platform. Notably, Justin Sun, a prominent figure in the cryptocurrency market, also withdrew approximately 65,584 ETH (around $154 million) during this period.

Aave's ETH usage has reached 100%, indicating that its available liquidity has been severely depleted and new borrowing capacity may be limited.