Breaking: AAVE Price Crashes 10% as Aave-Backed KelpDAO Faces $292M Crypto Hack

A crypto hack update surrounding Aave and KelpDAO caused the market to move drastically. According to a recent investigation, nearly $292 million was purportedly lost in a complicated mint-and-borrow transaction. It pushed AAVE price down over 10% today as ETH price also dropped due to the involvement of KelpDAO’s rsETH.

Another Crypto Hack Drains $280M From The Market

On Telegram, crypto sleuth ZachXBT revealed that KelpDAO might be facing an exploit worth more than $290 million. Based on the circulating information, the attacker had minted between $280 million and $300 million worth of rsETH, a liquid restaking token on EigenLayer.

Thereafter, the minted rsETH then collateralized on Aave V3 to borrow huge sums of ETH and WETH. The attacker then channeled these funds through Tornado Cash to cover up the trail of transactions, per on-chain tracking crypto tools.

Onchain data shows that hacker drained 116,500 rsETH. The stolen assets are estimated to be worth around $292 million, per the current market rates.

At 17:35 UTC, the transaction occurred as the attacker-linked wallet called lzReceive on EndpointV2 contract of LayerZero. The call pushed KelpDAO’s bridge contract to release 116,500 rsETH to another address associated with attacker address.

Reports estimate that now Aave V3 can be vulnerable to almost $177 million in bad debts. The incident has casted doubt on the collateralization of the protocol and risk settings.

KelpDAO & Aave Protocols Release Offical Statement

Hours after the incident, KelpDAO released an official statement. KelpDAO team wrote on X, “Earlier today we identified suspicious cross-chain activity involving rsETH. We have paused rsETH contracts across mainnet and several L2s while we investigate.”

They added they are working with LayerZero, Unichain, their auditors and top security experts on RCA. The team concluded, “We will keep you posted as we learn more about this situation.” The situation is alarming as, previously, the Drift Protocol faced an exploit on April 1 worth over $280 million.

Aave also wrote, “The rsETH markets on Aave V3 and Aave V4 have been frozen. Aave’s contracts have not been exploited and this is an exploit related to rsETH.” The further noted that if the protocol accumulated bad debt from this incident, they’ll explore ways to offset the deficit.

AAVE Price Falls Over 10%

After the KelpDAO crypto hack update, response in the market was instant. The AAVE token price nosedived 10.27% to $105.73 at the time of writing on Saturday, April 18. The chart shows that there is a steep intraday fall, which was caused by panic selling. In the meantime, Ethereum dropped by about 3% in the same time frame.

The impact on AAVE comes as KelpDAO’s rsETH is supported Aave V3 on Ethereum. According to the 2025 integration, it enabled rsETH depositors to earn more Kelp Miles and EigenLayer points. However, the latest hack has made things complex as Aave v3 faces huge bad debts now.

In a separate update today, RAVE coin is also struggling with pump-and-dump allegations. These incidents have rattled the crypto market as protocols and exchanges are launching investigations to mitigate risks.