TLDR
- Aave froze rsETH and wrsETH markets across deployments after a vulnerability warning.
- Lookonchain said more than $5.4 billion in ETH left Aave during the withdrawal rush.
- Aave’s ETH utilization rate reached 100% as borrowers used available liquidity.
- Justin Sun withdrew 65,584 ETH worth about $154 million from Aave, according to reports.
- BlockBeats said Aave pools stayed secure and the issue did not stem from the Aave protocol.
Aave faced sharp pressure on April 19 after a warning tied to rsETH sent users rushing to pull ETH. The move pushed Aave ETH utilization to 100% and left the pool fully used.
The rush followed reports that an attacker used rsETH to borrow ETH, creating bad debt on Aave. Aave then froze rsETH and wrsETH markets across deployments as teams examined the issue.
Aave moves to contain rsETH risk
Aave Guardian started an emergency freeze on rsETH and wrsETH markets on April 19. The action covered all Aave V3 deployments. It stopped new deposits and new borrowing tied to those assets.
Aave said existing positions would stay in place during the freeze. That meant users did not face forced changes to open positions. The restriction focused on new activity linked to rsETH and wrsETH.
Aave V4 applied related protections through its security committee. New supply and borrowing tied to rsETH were also disabled there. The changes were executed through Aave Core Hub and Kelp E Spoke.
BlockBeats reported that “all Aave liquidity pools remain secure and operational.” It also said the issue did not come from a flaw in Aave. The root cause remained under review by KelpDAO, LayerZero, and other teams.
Whale exits drain ETH liquidity
Lookonchain said the KelpDAO exploit left Aave with bad debt after the attacker deposited rsETH and borrowed ETH. That claim added pressure to an already tense market. Large holders then started pulling ETH from the protocol.
More than $5.4 billion in ETH reportedly left Aave during the rush. Justin Sun alone withdrew 65,584 ETH, worth about $154 million. Those moves added to worries about near-term liquidity.
As withdrawals climbed, Aave’s ETH utilization rate reached 100%. That level means all available ETH in the pool was in use. Lenders could face delays when trying to withdraw until liquidity returned.
The full utilization rate became the clearest stress signal during the event. It showed how quickly confidence can shift in DeFi markets. Still, the freeze targeted rsETH activity, not the broader Aave system.
Ethereum market stays calm for now
Despite the Aave stress, Ethereum price betting stayed firm in at least one prediction market. The market for ETH above $1,700 on April 19 sat at 99.9% YES. That level suggested traders still expected ETH to hold that mark.
Trading volume in that market remained low, based on the figures provided. USDC spent was limited, and price movement was small. Thin liquidity meant even a small trade could still shift the odds.
The reaction showed that traders separated short-term protocol stress from the broader ETH price path. Even so, the exploit kept attention on DeFi risk and liquidity conditions. Higher ETH targets for April may face closer review if pressure spreads.
For now, market participants are watching the ongoing investigation and any fresh protocol updates. They are also tracking whale flows and ETH pool liquidity on Aave. Aave said existing positions remain unaffected, while teams work through the rsETH issue.
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