$293 Million Hack Causes Aave's TVL to Evaporate $8 Billion, DeFi Protocol Faces Trust Crisis

BroadChain has learned that at 21:00 on April 20, according to CryptoNews, Aave is experiencing severe capital outflows, with its token AAVE dropping nearly 21% in seven days and trading in the $90-91 range over the weekend, highlighting the alarming speed of risk contagion among DeFi protocols. Despite a 50.20% surge in 24-hour trading volume to $539.45 million, this is driven by panic selling rather than capital accumulation. Whether this sell-off represents a buying opportunity or the beginning of a deeper crisis depends entirely on the subsequent trajectory of protocol confidence. The crisis was triggered on Saturday when hackers stole approximately $293 million worth of 116,500 rsETH tokens from Kelp DAO's LayerZero-based bridging protocol and used part of the stolen funds as collateral to borrow wrapped Ethereum on Aave v3, leaving the protocol with about $195 million in bad debt. As a result, Aave's total value locked plummeted from $26.4 billion to $17.94 billion, losing its top DeFi protocol ranking held before the weekend. Curve Finance, Ethena, and BitGo's Wrapped Bitcoin have all suspended the use of the LayerZero bridge as a precautionary measure. AAVE is currently trading around $91, down about 6% on Kraken in 24 hours and over 20% for the week, significantly diverging from the relatively mild -0.50% seven-day performance of the broader market. The surge in volume accompanying the price decline is a typical distribution signal, indicating that sellers are using any rebound to seek liquidity. The $90-92 zone constitutes immediate support; a clear break below $89 (briefly touched during the initial panic) could open a path to the structural demand area of $78-80. More realistically, rebuilding trust typically takes time, and prices may oscillate between $88 and $100, with any recovery likely to be slow and limited. The real risk lies in sustained capital outflows; if TVL falls below $15 billion and withdrawals continue, pressure will directly manifest in the price. Once $85 is breached, the structure will rapidly weaken, opening the door to $70.