DeFi Sector Contracts After Kelp DAO Exploit

The DeFi sector is facing a contraction after a recent exploit on Kelp DAO led to a decline in Total Value Locked (TVL) across the top 20 chains. According to data from DefiLlama, Ethereum has experienced a significant drop of 17.91% in the past month, with its TVL falling from over $56 billion to $46.17 billion.

The Kelp DAO exploit on April 18 saw attackers drain $292 million through a compromised LayerZero-powered cross-chain bridge. The incident triggered a contagion effect, with several other DeFi protocols also reporting losses. Aave, for example, urged WETH suppliers to withdraw due to rsETH exposure, leading to billions in outflows from the largest DeFi lending protocol.

Other chains have not been immune to the downturn, with Solana dropping 19.04% monthly and BSC falling by 5.61%. Even Bitcoin DeFi, which had been growing rapidly earlier in the cycle, lost 1.91% in the past 24 hours as contagion spread.

The worst performers tell the story of a sector in contraction. Mantle collapsed 52.01% in 30 days, falling from over $600 million to $303 million. Ink dropped 34.80%, while Katana lost 18.65%. Hyperliquid L1 fell 17.73%, and Arbitrum declined 16.00% monthly.

However, not all chains have been affected equally. Tron at 24.07% and OP Mainnet at 82.11% posted positive monthly gains, likely due to stablecoin flows seeking perceived safety outside the Ethereum restaking ecosystem.