Key Takeaways:
Attackers obtained 116,500 rsETH from Kelp’s bridge on April 18, 2026, and deposited the tokens on Aave V3 as collateral to borrow wrapped ether (WETH). Aave’s WETH pool hit 100% utilization as $5.4B+ in outflows pushed TVL down 24.11%, with AAVE token falling 17.7% on April 19. Aave’s Umbrella backstop is expected to cover an estimated $177M–$200M in bad debt, with the project confirming the protocol’s contracts were not exploited. Aave WETH Pool Hits 100% Utilization After rsETH Exploit Leaves $200M in Bad Debt“rsETH has been frozen on Aave V3 and V4, the asset does not have any borrowing power as a measure due to KelpDAO bridge exploit that happened outside of Aave. Both Aave V3 and V4 does not have further exposure to rsETH.”
Aave’s Umbrella system is the protocol’s built-in backstop for exactly this kind of event. If bad debt is confirmed, the mechanism can draw on reserves and, depending on the situation, may involve slashing staked AAVE to cover the deficit. The precise impact on depositors is still being determined.
The protocol’s next steps likely center on completing a bad debt review, issuing a formal Umbrella resolution, and monitoring whether outflows stabilize as markets absorb the full picture of what the KelpDAO incident left behind.
