The DeFi protocol Aave experienced significant liquidity withdrawals after the KelpDAO exploit, which amounted to $293 million.

What happened

Following the exploitation, Aave paused the rsETH and wrsETH markets across both V3 and V4 implementations to limit further exposure.

Recorded outflows

According to Arkham Intelligence, addresses associated with Justin Sun moved more than $402.8 million out of the protocol in successive transactions.

Other large participants also reduced their exposure, cumulatively withdrawing additional sums that amount to hundreds of millions of dollars.

Market implications

The freeze of specific markets and the wave of withdrawals have tightened available liquidity for affected pairs, creating short-term stress on borrowing and lending conditions.

Protocol administrators continue to monitor flows and coordinate responses to preserve solvency and mitigate counterparty risk for remaining users.

Next steps

Stakeholders and developers are assessing on-chain data and governance options to address the incident and restore regular market operations when feasible.