KelpDAO Exploit Causes Major Liquidity Crisis in AAVE and Ethereum

Severity: High (Score: 66.0)

Sources: Valuethemarkets, Bitget

Summary

On April 19, 2026, the KelpDAO exploit led to a significant breach affecting AAVE's Total Value Locked (TVL), which dropped by 25% from $26.4 billion to $20.7 billion, resulting in a theft estimated between $292 and $293 million. The exploit targeted a critical flaw in KelpDAO’s cross-chain bridge, causing extensive bad debt across Ethereum-based lending protocols. Following the incident, AAVE experienced $6.6 billion in withdrawals, with USDT borrowing rates surging to 15%. The AAVE V3 Core Market reported a USDT deposit scale of $3.29 billion, but only $400,000 in available liquidity remained, indicating a 99.99% utilization rate. The Plasma Market faced even worse conditions, with less than $0.01 available liquidity and a 100% utilization rate. The Ethereum market's prediction for ETH to reach $10,000 by year-end remains stagnant at 4%, reflecting a lack of confidence in the DeFi sector. The incident raises concerns about the stability of Ethereum's cross-chain infrastructure and potential regulatory responses. Investors are advised to monitor developments closely as the situation evolves. Key Points: • AAVE's TVL dropped 25% to $20.7 billion due to the KelpDAO exploit. • The exploit resulted in an estimated theft of $292-$293 million. • AAVE experienced $6.6 billion in withdrawals, leading to critical liquidity shortages.

Key Entities

• Data Breach (attack_type)
• Aave (platform)
• Kelp DAO (company)
• Ethereum (company)