The AAVE token fell 16% and deposits fled the protocol after attackers used drained rsETH as collateral to borrow wrapped ether, leaving Aave to quantify how much bad debt it is now carrying.
Kelp DAO's LayerZero-based rsETH bridge has been hit by what appears to be a major exploit, with early estimates pointing to losses of roughly 116,500 rsETH—about $292 million—an incident that quickly rippled through DeFi lending markets and sparked fresh concerns about cross-chain security. Kelp DAO said it identified suspicious cross-chain activity tied to rsETH and moved to halt rsETH contracts across mainnet and multiple layer-2 networks.
Aave is dealing with the aftermath of a DeFi exploit, but the real damage came after. The event sparked a liquidation cascade that wiped out leveraged positions and pushed the price into a weak demand zone. Now, with support under pressure and traders reloading positions, the market looks far from stable.
Aave's token got crushed on April 19. AAVE dropped more than 20% after a KelpDAO exploit triggered panic selling among big holders and pushed the protocol's ETH pool to the breaking point.
Here's what happened after the largest security incident of 2026 to one of the used protocols.
The exploit highlights vulnerabilities in DeFi protocols, increasing market volatility and investor anxiety, impacting Ethereum's stability. KelpDAO exploit creates $236M bad debt risk for AAVE, Ethereum drops 3%.
A major security breach rocked the decentralized finance space on April 18, 2025, as crypto investigator ZachXBT flagged a sophisticated exploit targeting KelpDAOs rsETH liquid restaking token, resulting in an estimated $292 million in losses and triggering sharp declines across related assets. According to on-chain analysis, the attacker exploited a cross-chain vulnerability to mint between $280 million and $300 million worth of rsETH on EigenLayer.
Aave has surged more than 30% since Monday, making it one of the standout performers in a market that has been searching for momentum. The move is drawing attention — and raising a question that is worth examining carefully: is this a genuine recovery, or a relief bounce after one of the most turbulent stretches in the protocol's recent history?
Aave approved a major governance reset, boosting its 2026 outlook with clearer revenue flows, tokenholder value capture, and buyback support.
Aave price has rallied over 7% this week amidst a surge in institutional interest and critical governance breakthroughs. Will it extend gains now that it has confirmed a bullish reversal pattern on charts?
Aptos (APT), up 3.8% since Tuesday, joined Aave (AAVE) as a top performer.
Aave approved the “Aave Will Win” proposal, which redirects 100% of revenues from all its branded products to the protocol's DAO. The vote ended the dispute that began in December 2025, when the Labs division silently diverted swap fees away from the community treasury.