- Aave saw almost $8.88 billion being wiped out from TVL in 48 hours.
- Fake collateral from KelpDAO allowed more than $200 million in borrowing, which caused panic exits and drained ETH.
- $AAVE is trading at a price less than $100 as of now.
Aave, a DeFi platform that is known for its lending protocol, is reeling from a massive liquidity crisis triggered by the KelpDAO rsETH exploit, with billions in TVL disappearing overnight and core markets frozen at 100% utilization.
rsETh Hack Sparks Panic Withdrawals
All of this started as attackers minted fake rsETH tokens, unbacked liquid restaking tokens (LRTs), and used them as collateral on Aave to borrow more than $200 million in real ETH. Aave quickly posted on social media platform X, “rsETH on Ethereum mainnet is fully backed,” but out of caution, froze rsETH across V3 and V4.
The platform also capped exposure and halted WETH reserves on Ethereum, Arbitrum, Base, Mantle and Linea. The team is “actively validating information and assessing potential resolutions.”
English (US)