Aave's TVL collapsed from $45.8B to $29.6B following KelpDAO's rsETH bridge exploit, with $196-280M in bad debt accumulating. The attack drained liquidity as hackers used illegally minted rsETH as collateral to borrow clean assets.Contagion EffectArbitrum security committee recovered $70M ETH, but damage triggered system-wide bank run. USDC pool hit 100% utilization for 4 days straight with 14% borrow rates failing to clear the market.Competitor GainsSpark Protocol absorbed $1.3B inflows as users fled Aave, with ETH deposit rates spiking to 130%. Proposal suggests raising Slope 2 from 10% to 50% to attract liquidity back.$AAVE
AAVE
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AVAX
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