Aave Freezes ETH And LST Markets

As the secondary shock of KelpDAO's exploit rippled through DeFi, large depositors including Justin Sun and MEXC withdrew millions from Aave. To mitigate impact, Aave disabled rsETH markets on V3 and V4, disabled WETH markets across Ethereum, Arbitrum, Base, Mantle, and Linea, and disabled borrowing on all LST and LRT collateral types.

Unable to withdraw from the frozen markets, users swapped their collateral to adjacent markets, sending the ETH, USDC, and USDT markets to 100% utilization. The stablecoin supply rates also surged above 13%. When markets are at 100% utilization, lenders are unable to withdraw, and many were stuck paying elevated interest on debt with frozen collateral. Aave's TVL has fallen by $8.4 billion in the last 48 hours.

Sponsored by

Lido Earn lets you deploy ETH or stablecoins into curated DeFi strategies for optimised yield. Two vaults, daily rewards, automatic compounding, and first-loss protection. Get started on stake.lido.fi/earn

Notice - April 20, 2026: EarnETH has direct exposure to rsETH.

Disclaimer: Content is for informational purposes only, not endorsement or investment advice. The accuracy of information is not guaranteed.

More from ETH Daily

Cover image for JP Morgan Buys $102m BMNR Shares

ETH Daily

Nov 8

JP Morgan Buys $102m BMNR Shares

J.P. Morgan acquired 1,974,144 shares of BitMine Immersion Technologies Inc. (BMNR), the world’s largest Ethereum treasury company.

Cover image for Succinct Announces $PROVE Airdrop

ETH Daily

Jul 28

Succinct Announces $PROVE Airdrop

$PROVE is the native token of the Succinct Prover Network and will serve as payment for generating proofs, economic security through staking and slashing, and governance.

Cover image for EigenDA Launches On Holesky Testnet

ETH Daily

Mar 29

EigenDA Launches On Holesky Testnet

Restakers, operators, rollup sequencers, and full nodes can now interact with EigenLayer on Holesky.