The $13 billion DeFi wipeout in two days, and it started with KelpDAO attack
Multiple lending and yield protocols are posting double-digit percentage declines in TVL, though token prices are seeing a limited decline.
What to know:
- Aave has seen $8.45 billion in deposits exit over 48 hours, driving a $13.21 billion slide in total value locked across decentralized finance platforms after attackers used stolen rsETH as collateral.
- The disruption stems from a $292 million exploit of Kelp’s bridge that left rsETH unbacked, prompting lending protocols to freeze affected markets and spurring widespread user withdrawals.
- While deposits have fallen sharply, major DeFi tokens such as AAVE, UNI and LINK have slipped only modestly, even as the incident underscores systemic risks in cross-chain bridge verification and DeFi’s tight interconnections.
Total value locked across DeFi fell from $99.497 billion to $86.286 billion, while Aave’s TVL declined by $8.45 billion to $17.947 billion over the same period, according to DefiLlama. Protocol-level data shows double-digit percentage drops across platforms, including Euler, Sentora, and Aave, with losses concentrated in lending, restaking, and yield strategies tied to the affected collateral.
The move stems from a $292 million exploit of Kelp’s bridge that allowed attackers to use stolen rsETH, a liquid re-staking token widely used in DeFi, as collateral to borrow funds on lending platforms.
Because these stolen tokens lacked legitimate collateral backing, borrowing against them created potential shortfalls for lenders. It’s similar to conning a traditional bank by depositing fake fiat and taking out loans against it, ultimately leaving the lender with bad debt.
