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Investors, including significant ones, have begun to withdraw funds en masse from the lending cryptocurrency platform Aave in light of news regarding the Kelp cross-chain bridge attack, which resulted in losses exceeding $292 million. The total value of assets locked on the platform has decreased by $6.28 billion, bringing it down to $20.114 billion, as noted by analysts from Lookonchain.
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The mass withdrawal of funds commenced shortly after unknown individuals who hacked KelpDAO secured a loan on Aave amounting to over 82,600 ETH (approximately $195 million), using non-existent tokens rsETH as collateral. Consequently, Aave has incurred a hopeless, or unsecured, debt, as explained by blockchain experts.
Notable large investors who withdrew funds from Aave include:
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cryptocurrency exchange MEXC withdrew $431 million;
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an investor with an address starting with 0x7CD0 withdrew $405.7 million — Lookonchain associates this wallet with the investment firm Nonco;
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the British investment company Abraxas Capital transferred $392 million from Aave.
In light of these developments, the native token of the Aave platform, AAVE, experienced a nearly 20% decline in value, prompting major holders to liquidate their assets. According to blockchain analytics, only three small investors sold off nearly 60,000 tokens valued at around $6 million.
Immediately following the reports of the incident involving Kelp, the Aave platform froze the rsETH markets on V3 and V4. The collateral taken by the attackers remains open on the platform.
The lending platform has faced internal disagreements and a loss of partners in recent months. In early April, Aave’s primary risk manager, Chaos Labs, announced the termination of its collaboration with the ecosystem after more than three years, citing disagreements with the protocol’s governance rules.
Shortly before this, partners of the project BGD Labs and Aave Chan Initiative (ACI) announced similar decisions. They were the main developers of the platform’s programs and updates. Chaos Labs was the last major technical participant in the ecosystem. Disputes among Aave participants began in December due to fees from the new CoW Swap integration, with revenues benefiting the parent company Aave Labs rather than the community treasury.
