Aave Hit by $5.4B ETH Outflows After rsETH Exploit Sparks Whale Panic

Aave saw $5.4B in ETH outflows after an rsETH exploit report, while AAVE fell 18% and ETH utilization reached 100%.

Aave faced heavy pressure after a reported rsETH exploit linked to Kelp DAO shook market confidence.

According to Lookonchain, the event left Aave with bad debt after an attacker used rsETH deposits to drain ETH from the protocol.

The report said more than $5.4 billion in ETH left Aave as large holders moved funds out.

The sharp outflows also pushed Aave’s ETH utilization rate to 100%, while the AAVE token fell more than 18% in one day.

Whale Withdrawals Add to Market Stress

The largest publicized withdrawal came from Justin Sun. Lookonchain said he withdrew 65,584 ETH, worth about $154 million, from Aave.

That transaction drew wide attention because of Sun’s profile and the size of the move.

Other whales also pulled funds as users reacted to the exploit. The combined ETH outflows reportedly passed $5.4 billion.

That number became a key focus because it showed how fast confidence had weakened.

Large withdrawals often shape sentiment in decentralized finance. When well-known wallets move funds, smaller users may follow.

That pattern appeared to play out here, and it added to pressure on Aave’s liquidity position.

The market response was not limited to withdrawals alone. Traders also began to reduce exposure to AAVE, the protocol’s governance token.

Selling activity picked up as concerns about bad debt and strained liquidity spread.

Report Links rsETH Exploit to Aave Bad Debt

Lookonchain said the exploit began when an attacker deposited rsETH into Aave and then drained ETH.

That process reportedly created bad debt on the lending platform. The update quickly spread across crypto markets, and traders began to track wallet movements in real time.

The report placed Kelp DAO at the center of the incident because rsETH is tied to its liquid restaking product.

At the time of the update, no full damage estimate had been confirmed by all parties involved. Still, the market reaction was swift, and users moved to reduce exposure.

Aave is one of the largest decentralized lending protocols, and its liquidity is watched closely during market stress.

When users withdraw ETH at scale, available supply falls fast. That creates tighter borrowing conditions, and it can increase concern across the wider market.

The report also said Aave’s ETH utilization rate reached 100%. This means all available ETH liquidity was in use.

Such a reading can make withdrawals harder, and it can add more pressure during periods of panic.

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AAVE Falls as Major Holders Sell

Lookonchain said AAVE dropped more than 18% during the sell-off. The token decline matched the broader concern around the rsETH exploit and the reported bad debt.

Falling prices also reflected fears that the protocol could face more stress if outflows continued.

Several whale sales were reported during the move lower. Wallet “smaugvision” sold 20,015 AAVE for 2.06 million USDC at an average price of $103.

Whale address 0xFC56 sold 20,000 AAVE for 2.05 million USDC at the same average price.

Another whale, 0xA2E4, sold 19,666 AAVE at an average price of $99. The wallet exchanged the tokens for 505.65 ETH and 10.11 WBTC. Based on the reported values, that sale totaled about $1.95 million.

These sales added more downward pressure to AAVE, and they reinforced concern among traders.

For now, market attention remains fixed on Aave, rsETH, and any official response from the teams involved.

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