The total value locked in one of crypto’s most trusted decentralized lending platforms is plummeting after hackers successfully attacked a third-party cross-chain staking protocol.
According to LookonChain, Aave has witnessed its TVL plunge by $6.28 billion in under 48 hours after KelpDAO’s LayerZero-powered cross-chain bridge was compromised and about $292 million of its rsETH token were minted out of thin air.
“Due to the KelpDAO exploiter borrowing over 82,600 ETH ($195M) from Aave using rsETH as collateral, bad debt has appeared on Aave.
Many whales have withdrawn funds from Aave, causing its TVL to drop from $26.396B to $20.114B, a decline of $6.28B.
Major withdrawals include:
• MEXC withdrew $431 million
• Whale 0x7CD0 (possibly linked to Nonco) withdrew $405.7 million
• Abraxas Capital withdrew $392 million
Aave itself was not hacked, but the protocol is now exposed to significant bad debt from the now-worthless rsETH collateral.”
Aave quickly froze rsETH markets on V3 and V4 to prevent further borrowing/deposits, and the team says it’s now exploring ways to offset any deficit.
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Generated Image: Midjourney
This post $6,280,000,000 Abruptly Exits Ethereum-Based Lending Platform As Cross-Chain Hack Triggers Mass Withdrawals may be modified as updates unfold.
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