PANews reported on April 21 that, according to The Block, multiple DeFi security incidents in the past three weeks have resulted in losses exceeding $600 million for the industry. The Kelp DAO vulnerability incident (which resulted in a $292 million loss) further exacerbated the downturn, causing DeFi TVL to drop to approximately $82.4 billion, the lowest level in a year and a 25% decrease from $110 billion at the beginning of 2026. The day after the $292 million attack on Kelp DAO, DeFi experienced a single-day drawdown of approximately 5.6%; the losses were most pronounced in the lending market, where TVL decreased by approximately 13%, while liquidity staking decreased by approximately 3.4%. Decentralized exchanges and derivatives protocols also saw declines of 2% to 3%.
Aave has frozen rsETH to limit risk exposure, causing a liquidity shortage in some stablecoin markets and locking up billions of dollars in deposits. Arkham Intelligence analysis suggests that if Kelp DAO cannot raise external funds, options include sharing approximately 16% of the losses among all rsETH holders, or prioritizing Ethereum mainnet holders while letting L2 users bear the majority of the losses; the latter would expose Aave rsETH holders to approximately $267 million in losses. Kelp DAO, Aave, and LayerZero are shifting blame among themselves, and Yearn's core developers say all parties have hired lawyers and entered a "full-scale battle" mode.
