Analysis

Two and a half months after the Kelp DAO shock, Aave no longer looks like a protocol in crisis. But it does not look fully repaired either. On 18 Apr, an attacker drained roughly $292mn of unbacked rsETH from Kelp DAO's cross-chain bridge and used that collateral on Aave to borrow real assets, mainly wrapped Ether (WETH). The result was a sharp liquidity squeeze. Utilization across major pools hit 100%, meaning supplied assets had been fully borrowed and lenders could not withdraw on demand unless borrowers repaid or fresh liquidity entered the system.