Long term after Kelp DAO attack ether Investors are leaving staking platforms in panic. The biggest risk of bridged, wrapped assets is the potential for exploitation of the mint mechanism, and Kelp DAO experienced this yesterday. Unrequited RSETH Although the attackers who managed to raid it caused a loss of less than $ 300 million, more than $ 5 billion in assets moved after the incident.
AAVE escape
Kelp DAO Following the attack, more than $5.4 billion ETH was outflowed from Aave. Justin Sun single-handedly withdrew 65,584 ETH and the massive capital outflow crashed the system, pushing WETH utilization rates on Aave to 100%. While most funds are shifting to the rival protocol Spark, many investors are also opting for cold wallets.
Aave The Utilization Rate, which you often hear about in lending protocols such as Compound, is a critical indicator of how much of the liquidity in a pool is lent. If the interest earned by lenders drops at this low, the cost of borrowing becomes cheaper, meaning there is a lot of money in the pool, but exceeding 90% indicates that the pool is starting to empty.
AAVE and Altcoins
Since the attacker placed fake rsETH as collateral on Aave and withdrew real WETH, there was a serious “bad debt” risk on Aave. AAVE, which dropped to $92, may experience further declines in the coming hours. Today’s move, which has the potential to turn into a general problem for DeFi, once again reminds investors of the risks of yield-generating Ethereum tokens.
ETH is not the only altcoin that took a hit following the incident ZRO It also compensated for some of its losses after experiencing a decline of nearly 30%. ZRO also faced selling pressure as a vulnerability (or misconfiguration) in the LayerZero infrastructure was allegedly used in the attack.
Since Kelp DAO is one of the biggest players in this field, the image of stake tokens has been severely damaged. Although these protocols were not directly hacked, investors are wondering: “Could a similar vulnerability exist here?” He started to leave these places out of fear. Although there are no major depeg (shifting of stability to the underlying asset) problems for now, the incident may escalate.
Kelp DAO, EigenLayer One of the biggest participants in the ecosystem. Since this situation will negatively affect the total amount of locked assets (TVL) on EigenLayer and the general restaking table, there may be fluctuations for EIGEN in the coming days.
Finally, ETH is struggling to maintain $2,300. The Ethereum ecosystem, which has already been worn out in the bear market, is facing one of its last big tests with these situations faced by staking tokens.
