The decentralized finance sector lost $13.21 billion in total value locked over two days after the KelpDAO breach, dwarfing the quieter slide in Bitcoin (BTC) markets.

KelpDAO Contagion Hits Aave

The drop brought aggregate DeFi TVL down from $99.49 billion to $86.28 billion in 48 hours. Aave alone accounted for $8.45 billion of that decline.

Hackers drained roughly 116,500 rsETH, worth about $293 million, from KelpDAO's LayerZero-powered bridge. The stolen tokens were then pledged as collateral on Aave v3 to borrow wETH, leaving an estimated $195 million in bad debt.

Aave froze rsETH markets and paused wETH lending across Ethereum, Arbitrum, Base, Mantle and Linea. Its USDT and USDC pools hit 100% utilization, trapping about $5.1 billion in stablecoin deposits.

Also Read: $292M KelpDAO Hack Highlights Ethereum Weakness, Hoskinson Says

Lazarus Fingerprints, Investor Flight

LayerZero attributed the attack to North Korea's Lazarus Group, and blamed KelpDAO's single-verifier bridge setup. Analytics firm Arkham Intelligence warned that without external capital, rsETH holders may face roughly 16% socialized losses.

Peter Chung, head of research at Presto Research, said the episode exposes risks in the verification layer that cross-chain bridges depend on. Whale exits followed quickly, with MEXC and Abraxas Capital pulling $431 million and $392 million, respectively.

DeFi has now absorbed more than $600 million in exploit losses across three weeks. That run includes the $285 million Drift Protocol hack earlier this month and smaller incidents at Resolv Labs, Hyperbridge and Rhea Finance, all hitting a sector still weighed down by falling yields.

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