Aave Faces Liquidity Crisis Amid KelpDAO Hack Fallout

Aave, a leading DeFi lending protocol, is facing a liquidity crisis after recent outflows triggered by exposure to the KelpDAO hack. The incident has resulted in a significant decrease in AAVE tokens' value, with prices crashing from $112 to $92.

The utilization rate for some vaults, including WETH and stablecoin vaults, has peaked at 100%, indicating a virtual inability to withdraw funds. This has raised concerns about the protocol's resilience and potential impact on DeFi as a whole.