KelpDAO Exploit Triggers Aave Liquidity Crisis Amid Contagion Fears

The DeFi market is facing a new challenge after the KelpDAO exploit, which has put pressure on Aave's liquidity protocol. The hack resulted in massive volatility in lending markets, causing AAVE's value to drop by nearly 18% within one trading session.

Investigations into the incident are ongoing, but traders using Wang are already liquidating positions due to concerns about contagion spreading through the restaking ecosystem on Ethereum. This has created significant anxiety for both traders and institutional participants.