The total value locked in one of the most trusted cryptocurrency decentralized lending platforms is plummeting after hackers successfully attacked a third-party cross-chain staking protocol.
According to LookonChain, Aave did this Witness Its TVL fell by $6.28 billion in less than 48 hours after KelpDAO’s LayerZero-based cross-chain bridge was compromised and approximately $292 million of its rsETH token was minted out of thin air.
“As the KelpDAO exploiter borrowed over 82,600 ETH ($195 million) from Aave with rsETH Bad debts have surfaced at Aave as collateral.
Many whales have withdrawn funds from Aavewhich caused the TVL to fall from $26.396 billion to $20.114 billion, a decrease of $6.28 billion.
The main withdrawals include:
• MEXC withdrew $431 million
• Whale 0x7CD0 (possibly affiliated with Nonco) withdrew $405.7 million
• Abraxas Capital withdrew $392 million
Aave itself was not hacked, but the protocol is now exposed to significant bad debts from the now worthless rsETH collateral.”
Aave quickly froze the rsETH markets on V3 and V4 to prevent further borrowing/deposits, and the team says it is now looking at ways to cover any shortfalls.
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