Aave (AAVE) Price: $15 Billion Departs from the Protocol After the KelpDAO Hack Freezes the Markets

TLDR

• An exploit of Kelp DAO’s rsETH bridge, valued between $292–$293 million, led to a bank run on Aave, resulting in over $15 billion being withdrawn from the protocol.
• Aave’s primary lending markets reached 100% utilization, effectively freezing approximately $5 billion in USDT and USDC, preventing any withdrawals.
• The total value locked (TVL) decreased from $48.5 billion to around $30.7 billion, a reduction of roughly one-third within a few days.
• CertiK researcher Natalie Newson indicated that Aave’s “self-defense systems are down,” suggesting that bad debt could continue to accumulate.
• The AAVE token is currently trading near $91, holding just above the $90.47 support level, with resistance identified at $98.80.

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(SeaPRwire) –   Aave, a prominent decentralized lending platform in the DeFi space, is currently experiencing a significant liquidity crisis. This situation was triggered by a hack on a separate protocol, which initiated a cascading effect that has frozen its core markets.

The issues began on April 18, when attackers exploited a vulnerability in a LayerZero V2 bridge connecting Unichain and Ethereum. This allowed them to steal approximately $293 million worth of rsETH from Kelp DAO without de-minting the corresponding tokens on the originating chain.

Subsequently, these stolen tokens were deposited as collateral into Aave V3. The attacker then used this collateral to borrow nearly $200 million in WETH. As news of the unbacked collateral circulated, users began rapidly withdrawing their funds.

(1/2 ) $AAVE signals around the Kelp exploit discovered with Claude via Santiment MCP:
Whale transactions (>$100K) spiked from 2–6 per hour to 43 within ~90 min of the exploit.
Exchange inflows went from ~$38K to $3M within ~90 min, peaking at $8.5M on Sat afternoon.
… pic.twitter.com/sKI9U5uyju

— Santiment (@santimentfeed) April 20, 2026

In less than 24 hours, over $6.6 billion was withdrawn from Aave. Prominent entities such as Justin Sun and the MEXC exchange were among those who withdrew substantial amounts. The ETH market was the first to reach 100% utilization, followed by the USDT and USDC pools.

When a lending protocol reaches 100% utilization, it signifies a complete lack of available liquidity. This prevents users from withdrawing funds and halts the system’s ability to process liquidations.

DeFi commentator DeFi Warhol clarified the situation, stating: “It actually means no liquidity available for withdrawals. Liquidations can’t be processed.” He further noted that approximately $3 billion in USDT and $2 billion in USDC are now inaccessible without a clear exit.

Aave’s Self-Defense Systems Are Down

Natalie Newson, a senior blockchain security researcher at CertiK, highlighted the severity of the situation for Aave.

“100% utilization doesn’t just mean a lack of liquidity; it means the protocol’s self-defense systems are down,” she explained. Without liquidity, undercollateralized positions cannot be liquidated, leading to a continuous increase in bad debt.

Newson emphasized that Aave itself was not directly compromised. “It got stuck due to the fallout from someone else’s bridge failure,” she stated. LlamaRisk has projected potential bad debt scenarios ranging from $123.7 million to $230.1 million.

Aave’s governance body took swift action by freezing rsETH reserves, setting loan-to-value ratios to zero, and adjusting interest rates. However, the impact on the total value locked had already occurred.

Capital Moves to Competing Protocols

AmberCN reported on April 22 that total outflows from Aave over a three-and-a-half-day period amounted to $15.1 billion. The TVL dropped from $48.5 billion to $30.7 billion.

Morpho also experienced outflows totaling $1.5 billion. In contrast, SparkLend saw an increase of $1.3 billion in new deposits, with some of these funds reportedly originating from the same large investors who exited Aave.

Aave’s on-chain revenue has declined from $1.1 million in early February to $625,000 as of Monday.

When asked for comment by CoinDesk, Aave founder Stani Kulechov responded: “I do not have anything useful to say.”

The AAVE token is currently trading at approximately $91.22, positioned just above the critical support level of $90.47. Resistance is observed near the 20-day EMA, around $98.80.