Key Takeaways:
- KelpDAO exploit drained $300M+ on Apr. 18, hitting Aave with bad debt and freezes.
- Defillama data shows DeFi TVL fell $14.17B to $85.32B, signaling system-wide stress.
- Lido leads TVL as Aave drops 32.44%, while RWA and liquid staking post 7-day gains.
KelpDAO Fallout Pressures DeFi Markets, Billions Exit in 24 Hours
Over the weekend, Bitcoin.com News reported on the KelpDAO exploit, which involved the draining of roughly 116,500 rsETH before the assets were deployed as collateral across DeFi protocols, triggering freezes and the buildup of bad debt, much of it concentrated on the lending platform Aave.
Because rsETH served extensively as collateral across tightly linked DeFi protocols, the exploit rapidly triggered freezes and liquidity strain elsewhere, transmitting the shock across the system.
Since the incident, the total value locked (TVL) across all DeFi protocols tracked by defillama.com has declined by approximately $14.17 billion, falling from $99.49 billion to the current $85.32 billion.
Over the past week, Aave’s TVL has fallen 32.44% to its current level of $17.038 billion. In total, it lost just over $8 billion or 57.73% of the $14.17 billion that left the DeFi sector since April 18. Aave once held the top position among DeFi protocols by TVL, but that title now belongs to the liquid staking application Lido.
Across the sector, DeFi protocols recorded notable outflows this week, with Morpho down 9.62%, Ethena slipping 7.79%, and Sky (formerly MakerDAO) declining 9.76% over the last seven days.
The DeFi application Spark posted a steeper contraction of roughly 31.6% this week. Curve Finance registered an 11.09% decline, while Pendle’s TVL decreased by 12.4%. Solv Protocol recorded a sharp drop at 68.09%, followed by EulerDAO at 51.74% and Predict Fun at 51.64%.
Losses continued with Merlinswap down 42.4% and Overnight Finance falling 40.13%, while Sentora posted a 38.52% decline. Abracadabra dropped 33.42% and Apebond fell 33.34%, and Vectis Finance took a 30.69% hit.
Re7 Labs shed 30.09%, followed by Kumbaya at 28.41%, Treehouse at 26.46%, and Dolomite at 24.7%. The wrath this week was harsh to say the least, and the KelpDAO exploit only exacerbated the matter.
Other segments of the DeFi protocol sector, however, recorded gains, with liquid staking platforms, real-world asset (RWA) products, and similar vehicles posting increases over the past seven days.
The episode highlights how tightly coupled DeFi systems can amplify localized failures, leaving protocols exposed to rapid capital flight, while select sectors such as liquid staking and RWA products continue to attract inflows despite broader strain.
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