Kelp Hack Fallout: Aave Loses $15.1 Billion in Deposits Within Days

The Kelp protocol exploit has triggered a dramatic capital flight from Aave, the largest DeFi lending platform, with users withdrawing $15.1 billion in assets over just three and a half days.

Aave Hemorrhages One-Third of All Deposits

Blockchain analysts at EmberCN flagged the persistent outflows from Aave. Between April 18 and April 22, total deposits plummeted from $48.5 billion to $30.7 billion — the protocol shed more than a third of its locked liquidity in under four days.

"Funds on Aave continue flowing out. In 3.5 days, $15.1 billion has exited: total deposits dropped from $48.5B to $30.7B — roughly one-third of all capital has fled." — 余烬 (@EmberCN), original post

The picture across other major lending platforms was mixed:

• Morpho lost $1.5 billion — deposits shrank from $11.7 billion to $10.2 billion amid the rsETH incident;
• Spark gained $1.3 billion — TVL climbed from $1.9 billion to $3.2 billion.

EmberCN noted that Spark absorbed funds withdrawn from Aave by large investors and institutional players.

Whale Spotted Migrating to Spark

On-chain analytics firm Lookonchain tracked one of the notable large holders fleeing the platform. A whale identified as 0xD91D created a fresh wallet and deposited 9,500 wstETH into Spark. The user then borrowed 9,500 ETH (approximately $22.68 million), sent the funds to Binance to swap for USDE stablecoins, and subsequently transferred the proceeds back to Aave to repay outstanding loans.

"Whale 0xD91D created a new wallet (0xEb2a) and deposited 9,500 $wstETH into Spark. He then borrowed 9,500 $ETH ($22.68M), sent it to Binance to sell, and withdrew $USDE from Binance to repay loans on Aave." — Lookonchain (@lookonchain), original post

Aave Partially Unfreezes wETH Reserves

In its latest incident update, the Aave team announcedthat wETH reserves on the Ethereum Core V3 market had been unfrozen, allowing users to top up balances with wrapped Ether once again. However, the wETH utilization ratio remains at zero. Reserves on Ethereum Prime, Arbitrum, Base, Mantle, and Linea are still locked.

AAVE Token Under Pressure as Whales Pile Into Shorts

The native AAVE token has reacted negatively to the outflows, though it managed a slight recovery over the past 24 hours. At the time of writing, the token was trading near $94, down 8% on the week.

Alphractal CEO Joao Wedson highlighted that whales and top traders have been aggressively building short positions on AAVE, while retail investors are paradoxically positioning against that bearish sentiment.

"Whales and top traders have been aggressively positioning in shorts on AAVE. Interestingly, retail investors are positioning against this sentiment. These large entities are doing everything they can to eliminate all retail hope in altcoins." — Joao Wedson (@joao_wedson), original post

Why This Matters

A $15.1 billion withdrawal from DeFi's largest lending protocol in mere days is a watershed event for the entire decentralized finance sector. Losing one-third of its deposit base shows how rapidly user confidence can erode — even when the root cause originates from a third-party protocol. The redistribution of liquidity toward Spark suggests capital isn't abandoning DeFi altogether but actively seeking perceived safer ground.

For context, Arbitrum developers froze 30,766 ETH on April 21 as part of the ongoing investigation into the Kelp exploit.