Aave Freezes ETH And LST Markets
Aave disabled rsETH, WETH, and borrowing on all LST and LRT collateral types after the KelpDAO exploit, sending markets to 100% utilization.
As the secondary shock of KelpDAO's $290 million 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. Fluid launched an aWETH redemption protocol offering stranded lenders a ~2% exit to wstETH or weETH.
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KelpDAO Loses $290M In LayerZero Bridge Exploit
An attacker released 116,500 rsETH from KelpDAO's bridge contract on Ethereum mainnet without a corresponding burn on L2.
KelpDAO, a liquid restaking protocol, suffered a $290 million exploit involving its LayerZero-powered cross-chain bridge. On April 18, 2026, at approximately 17:35 UTC, an attacker was able to release 116,500 rsETH from the bridge contract on Ethereum mainnet without a corresponding burn event on a Layer 2. The amount represents roughly 18% of the rsETH circulating supply.
The attacker exploited a single point of failure in KelpDAO's 1-of-1 Decentralized Verifier Network (DVN) configuration, in which LayerZero Labs' DVN acted as the sole verifier. The funds were quickly distributed across multiple wallets and used as collateral across Aave V3, Compound V3, and Euler, allowing the attacker to borrow an estimated $236 million in WETH. Aave is facing significant bad debt exposure, potentially exceeding $170 million across deployments.
Tensions between LayerZero Labs, KelpDAO, Aave, and users are escalating as attribution of the attack remains unconfirmed, with responsibility still disputed. LayerZero has since attributed the attack to North Korea's Lazarus Group. Aave froze ETH and LST markets in response, and Fluid launched an aWETH redemption protocol to help stranded lenders.
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#928 - World ID 4.0, EIP-7716, And Mitsui Metals On OP Mainnet
World ID 4.0 extends to AI agents, Obol proposes EIP-7716 for Hégota, and Mitsui launches commodity-backed tokens on OP Mainnet.
World ID 4.0 extends to AI agents.
Obol proposes EIP-7716 for Hégota.
Mitsui commodity-backed tokens.
Paragraph AI Agent skills.
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Listen to this episode from Ethereum News on Spotify. World ID launches its 4.0 upgrade. Obol proposes EIP-7716 for Hégota. And Mitsui will launch commodity-backed assets on OP Mainnet. Read more: https://ethdaily.io/928 Sponsor: Lido Earn lets you deploy ETH or stablecoins into curated DeFi strategies for optimised yield.
](https://open.spotify.com/episode/7yhJycXX7x7bFcTBOJzTwA)
EarnUSD is a stablecoin vault by Lido for earning transparent, onchain USD-denominated rewards. Get started today at stake.lido.fi/earn
World, the digital identity protocol co-founded by Sam Altman, released its World ID 4.0 upgrade, expanding its "proof of human" credentials across consumer apps, enterprises, and AI agents. World ID for AI agents links AI agents to a verified human. Read more →
Obol proposed EIP-7716 for inclusion in the Hégota hardfork, introducing a temporary increase in penalties for validator liveness failures during large-scale outages. The proposal aims to discourage centralized validator setups and reduce the risk of severe mass slashing events. Read more →
Optimism announced that Mitsui & Co. Digital Commodities is launching commodity-backed crypto assets on OP Mainnet. The first tokens will be tokenized Gold, Silver, and Platinum, set to begin listing on April 20, 2026. Read more →
Paragraph integrates AI
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New ledger scam
Disclaimer: Content is for informational purposes only, not endorsement or investment advice. The accuracy of information is not guaranteed.