Crypto lending value locked rises 55% since July after Q2 outflows, Aave says token risk has grown
Cointelegraph reports crypto lending value locked has climbed more than 55% to about $56 billion since July, after $11.33 billion left the sector in Q2 amid fallout from the Kelp DAO hack.
Why it matters
Lending markets recovering to around $56 billion puts more user funds inside protocols that borrow collateral from one another, so a single exploit can spread across connected protocols. Aave Labs' chief executive has named token bridges, oracle configuration and issuer security as the exposure, and the same outlet reports the attack surface is widening as AI-assisted attacks grow. Only one outlet covers this, so the scale of the recovery and the risk assessment both rest on a single account.
Key facts
Hackers exploited a Kelp DAO cross-chain route in April, creating 116,500 unbacked rsETH tokens worth about $290 million at the time.
116,500 rsETHReported by Cointelegraph
The Kelp DAO hack in April left Aave users unable to access their ETH.
Reported by Cointelegraph
Stani Kulechov, founder and chief executive of Aave Labs, said a protocol accepting a token as collateral also accepts that token's bridge, verifier configuration, oracle and issuer's operational security.
Reported by Cointelegraph
Cointelegraph reports the growth in locked lending value has widened the honeypot exposed to AI-assisted hacks across interlinked DeFi protocols.
Reported by Cointelegraph
What happened
Cointelegraph, the only outlet in this set, reports that total crypto lending value locked has gained more than 55% since the beginning of July to sit around $56 billion, reversing a second quarter in which $11.33 billion left the sector, a figure Cointelegraph attributes to Galaxy. It links that outflow to a collapse in confidence in lenders after the April Kelp DAO hack, which left users unable to access ETH through Aave, a protocol the article calls the most trusted. Cointelegraph says the Kelp DAO exploit involved a cross-chain route and produced 116,500 unbacked rsETH tokens, worth about $290 million at the time. Stani Kulechov, founder and chief executive of Aave Labs, told Cointelegraph's Magazine that accepting a token as collateral also means accepting that token's bridge, verifier configuration, oracle and issuer's operational security. The growth in locked value, Cointelegraph says, has widened the exposure of interconnected protocols, and only one outlet has covered this story, so its figures on the recovery and the remaining risk are not corroborated.
How the story developed
- First report
First report by Cointelegraph
Crypto lending rises again… but have they solved the risks?
- Update
Kelp DAO cross-chain route exploited, minting unbacked rsETH
Hackers created 116,500 unbacked rsETH, worth about $290 million at the time, and Aave users were left unable to access ETH.
- Official statement
Aave Labs chief executive describes token collateral attack surface
Stani Kulechov tells Cointelegraph's Magazine that a protocol takes on the bridge, verifier configuration, oracle and issuer security of any collateral token it accepts.
- Update
$11.33 billion leaves the crypto lending sector in Q2
Galaxy figures cited by Cointelegraph show the outflow, which the outlet links to the Kelp DAO hack and a crisis of confidence in lenders.
- Update
Lending value locked rises more than 55% from early July
Total value locked reaches roughly $56 billion, reversing the Q2 decline.
Affected entities
Original sources
| Publisher | Report | Role | Published |
|---|---|---|---|
| Cointelegraph Crypto media | Crypto lending rises again… but have they solved the risks? | Original |
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