Why did the KelpDAO hack affect Aave?

The attacker deposited stolen rsETH into Aave V3 as collateral and borrowed ETH and WETH against it. That left Aave exposed to up to $177M in bad debt if the collateral couldn’t be recovered.

What is the rsETH market status now?

The rsETH market remains frozen across Aave V3 and V4. L1 rsETH is reported fully backed, but withdrawal activity is paused across multiple protocols because oracle pricing is still unreliable.

How did Save Finance get affected?

Save Finance saw USDC lending utilization rise above 70% as defensive liquidity moves swept through Solana-based lending markets in response to the KelpDAO hack.

What is a DVN in LayerZero?

A Decentralized Verifier Network validates cross-chain messages before they execute. A 1-of-1 DVN means a single verifier controls whether a message is treated as legitimate - if that verifier is compromised or bypassed, nothing else stops a fraudulent message from going through.

Is Ethereum mainnet ETH at risk?

No. The exploit was limited to the L2 bridge layer on the Unichain-to-Ethereum route. Core L1 ETH was not affected.

Delta Exchange Blog

Educational

How the KelpDAO Hack Exposed Cross-Chain Weaknesses Across DeFi

Shubham Goyal

May 20, 2026