DeFi TVL Plunges Across Top Chains After KelpDAO Hack

by

DeFi TVL Drops on All Top 20 Chains After KelpDAO Exploit

As an analyst, I’ve been tracking the recent market downturn, and it really picked up speed after the Kelp DAO exploit on April 18th. A compromised cross-chain bridge, built using LayerZero, allowed hackers to drain around $292 million worth of rsETH, and that event significantly intensified the selling pressure.

According to data from DefiLlama, Ethereum—the leading blockchain in decentralized finance, controlling 53.91% of total value locked (TVL)—has seen a 17.91% decrease in locked value over the last month. Currently, Ethereum holds $46.17 billion, a drop from more than $56 billion before the recent series of hacks.

Is Money Leaving DeFi?

The data indicates money is flowing out of the market. This shrinking of the DeFi sector is similar to what happens when investors become risk-averse, but the extent of the losses is particularly noticeable.

Solana’s value decreased by over 19% in the past month, even though it saw a small increase of 0.17% in the last week. Binance Coin (BSC) also dropped, falling by 5.61%. Bitcoin DeFi, which had been growing quickly, experienced a 1.91% loss in the last day as problems in the crypto market spread.

Recent market downturns have significantly impacted several projects. Mantle experienced the largest drop, losing over half its value in just 30 days, falling from over $600 million to $303 million. Ink, Katana, and Hyperliquid L1 also saw substantial declines of 34.80%, 18.65%, and 17.73% respectively. Even Arbitrum, typically considered a stable platform for decentralized finance, decreased by 16% in a month.

Among the top 20 cryptocurrencies, only Tron and OP Mainnet saw their values increase last month, rising by 24.07% and 82.11% respectively. This growth was likely driven by investors moving stablecoins to these networks, possibly seeking more security than they felt within the Ethereum restaking space.

Kelp DAO Hack Triggers Contagion Across DeFi

Hackers stole $292 million from Kelp DAO by exploiting its system for moving assets between different blockchains. They compromised some network connection points and launched a disruptive attack to alter a key security setting, allowing them to quickly steal funds from both Ethereum and Arbitrum.

The issue quickly escalated, prompting Aave to advise those who had supplied WETH to withdraw their funds because of potential risks related to rsETH. This led to billions of dollars leaving Aave, the biggest lending platform in the decentralized finance (DeFi) space. As a safety measure, Ethena, Curve Finance, ether.fi, and Tron DAO all temporarily paused their LayerZero OFT bridges.

LayerZero Labs has identified TraderTraitor, a group connected to the Lazarus Group, as being responsible for the recent attack. This same group was previously implicated in the exploit of the Drift Protocol earlier this month.

Are Users Repricing DeFi Risk?

The decrease in Total Value Locked (TVL) indicates that users are re-evaluating the risks associated with moving assets between different blockchains. Kelp, a leading DeFi platform that once held over $2 billion in value, is now facing serious doubts about whether it can fully compensate its users.

Plasma’s value fell almost 29% in a week, and Ink dropped over 33%. These significant declines suggest people are actively selling these assets, rather than simply seeing their price decrease over time.

Ethereum remains the leading platform for decentralized finance (DeFi), holding 53.91% of the total value locked (TVL). Solana follows with 6.49%, then Binance Smart Chain (BSC) at 6.34%, Bitcoin at 5.91%, and Tron at 5.89%. However, maintaining a large share without seeing overall growth suggests the DeFi market may be decreasing in size, rather than investors simply moving to better options.

The big question for DeFi right now is whether recent changes are just a short-term adjustment, or a fundamental change in how people see the risks involved with using bridges and restaking platforms.

Read More

2026-04-20 23:18