"Attackers obtained 116,500 rsETH from Kelp's bridge on April 18, 2026, and deposited the tokens on Aave V3 as collateral to borrow wrapped ether (WETH). Aave's WETH pool hit 100% utilization as $5.4B+ in outflows pushed TVL down 24.11%, with AAVE token falling 17.7% on April 19."
"Once KelpDAO paused rsETH contracts in response to the exploit, the collateral backing those borrow positions became worthless. The loans could no longer be liquidated in any meaningful way, leaving Aave holding bad debt across its WETH reserves."
"Aave confirmed the protocol's own contracts were not exploited. Aave's contracts have not been exploited, the project's X account stated, describing the event as an issue tied to rsETH."
"Aave founder Stani Kulechov stated: rsETH has been frozen on Aave V3 and V4, the asset does not have any borrowing power as a measure due to KelpDAO bridge exploit that happened outside of Aave."
Aave is experiencing a liquidity crisis due to an exploit involving 116,500 rsETH from Kelp's bridge. Attackers used these tokens as collateral to borrow wrapped ether (WETH), leading to 100% utilization of Aave's WETH pool. The total value locked (TVL) decreased by 24.11%, and AAVE token value fell by 17.7%. Aave's Umbrella backstop is expected to cover $177M to $200M in bad debt. Aave confirmed that its contracts were not exploited, and measures were taken to freeze rsETH markets and remove borrowing power.
Read at news.bitcoin.com
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