Aave Hit by $8.45B Deposit Run After KelpDAO LayerZero Bridge Exploit

Odaily Planet Daily reports that an exploit of KelpDAO's LayerZero bridge in April led to losses of $292 million and sparked an $8.45 billion deposit run on Aave within 48 hours, described as the largest capital outflow in DeFi to date. Aave founder Stani Kulechov said Aave V3's design held up under stress, pointing to the protocol's resilience. Independent data, though, suggests the platform's ability to weather the shock depended largely on a roughly $300 million emergency backstop, including 25,000 ETH committed by the Aave DAO and a personal contribution of 5,000 ETH from Kulechov (about $8.4 million). Kulechov said the weakness stemmed from third-party infrastructure rather than Aave's core smart contracts. Analysts said the episode highlighted gaps in Aave's risk framework and insurance protections, leaving the protocol with significant bad debt of around $123.7 million in wETH. To reduce the risk that future bridge failures trigger systemwide runs, Aave V4 is expected to introduce a modular "hub-and-spoke" architecture designed to allow localized risk adjustments and the ability to freeze collateral. (CoinDesk)