Aave DeFi Protocol Faces $6 Billion TVL Drop as Kelp Hack Uncovers Structural Risk
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.
The decentralized finance (DeFi) lending platform Aave has encountered a significant setback with a staggering $6 billion Total Value Locked (TVL) drop following a hack that exposed structural vulnerabilities.
Reports indicate that the AAVE token experienced a 16% decline as deposits rapidly exited the protocol. The exploit involved attackers leveraging drained rsETH as collateral to borrow wrapped ether, resulting in Aave grappling with the aftermath and assessing the extent of bad debt within its system.
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