hodler

23 Apr 2026, 15:42

Circle Draws Backlash for Aave USDC Rate Hike Proposal

Circle is facing a wave of criticism after a proposal linked to its chief economist suggested sharply increasing USDC borrowing costs on Aave, as the lending pool grinds through a liquidity crunch that has dragged on since the KelpDAO exploit. The plan has gone down badly with DeFi users, many of whom say it would make things worse for people already trapped in a broken market. Proposal to Raise Aave USDC Rates On April 22, Circle CEO Jeremy Allaire shared a forum post by Gordon Liao outlining adjustments to Aave v3 parameters to fix what he called a “non-clearing” market for USDC. The pool has been stuck near full utilization for four days. Available liquidity sits below $3 million. Borrow rates have been flat at around 14% even as roughly $60 million drained out of the pool in a single day. Liao’s fix centers on the “Slope 2” parameter, which controls how sharply borrowing rates climb at high utilization. He wants to raise it to as high as 50%, while also lowering the optimal utilization threshold. His argument is that 14% simply is not high enough to pull fresh capital in, because many of the people currently borrowing do not particularly care what the rate is; they are trying to exit positions that the April 18 KelpDAO exploit left them stuck in, and they will pay almost whatever it costs to get out. At full utilization, the parameters would push the maximum supply rate to around 48%. Liao compared the logic to how traditional money markets work: rates spike, capital arrives, rates come back down. He also stressed the post is his personal view, not an official Circle position. However, after talking to some community members, the economist walked back parts of the proposal. He acknowledged in a follow-up comment on the Aave forum that liquidation thresholds were much lower than he had initially expected. The exploit itself drained nearly $300 million from KelpDAO, with attackers using compromised rsETH as collateral on Aave to borrow large amounts of real assets, leaving behind bad debt and frozen positions across the protocol. Community Pushback Is Swift The response was not warm. Forum user Zeebradoom put it plainly: Liao was “proposing a 50% interest rate on a population that is in some cases physically unable to deleverage.” Another commentator, JosueMpia, said Aave’s priority right now should be “rebuilding market confidence rather than aggressively forcing utilization normalization through extreme interest rate adjustments.” He warned of liquidation cascades and said he would vote against it. On X, people were less measured. “You need to fire your chief economist,” wrote Avant Protocol CEO Rhett Shipp. Another user went further, arguing that Circle should have deposited USDC directly into the pool instead of drafting governance proposals. YCC founder Duo Nine stripped it down to the basics: “Circle’s proposed solution for the Aave crisis is to hike interest rates and liquidate everyone.” The only one who gave Liao partial credit was pseudonymous analyst PaperImperium, who pointed out that while the diagnosis was not wrong, the prescription was off. “Going straight to 40% seems destined to force liquidations,” they wrote. They also raised a harder question, asking if any serious lender would actually put money into the pool at elevated rates when nobody yet knows how much bad debt is sitting in the system. “This is at its heart a risk that is unmeasured,” the analyst stated. The post Circle Draws Backlash for Aave USDC Rate Hike Proposal appeared first on CryptoPotato .

23 Apr 2026, 15:37

AAVE Price Holds Key Support While Traders Build Leverage Positions

AAVE price is poised for a potential rebound from the support trendline of a falling wedge pattern. AAVE’s open interest (OI) increased from $211 million to $321 million over two weeks, indicating a leverage build up in its futures market amid the anticipation of potential price move. A fresh higher low formation in relative strength index (46%) indicator suggests rising recovery momentum in AAVE. AAVE, the native cryptocurrency of decentralized leading protocol Aave, is down 1.25% during Thursday’s U.S. market hours to trade at $92.78. While the downtick gained its initial momentum with the broader market slowed, the spillage from Kelp DAO rsETH exploit continued to pressurize AAVE price. The deeper analysis of the technical chart shows an emerging bullish reversal pattern that could push the coin price for a fresh recovery trend. AAVE Open Interest Surges 52% Despite DeFi Crisis and Liquidity Drain Since last week, the majority of major cryptocurrencies witnessed notable recovery, in-line with Bitcoin’s price jump above $78,000. The primary catalyst for this surge was de-escalating geopolitical tension following the ceasefire agreement between the U.S., Iran and Israel. However, the AAVE price detrailed from this recovery following the largest DeFi hack of 2026. On April 18, 2026, the liquid restaking protocol Kelp DAO was subjected to a significant security breach causing the loss of around 116,500 rsETH worth about 292 million dollars. The bridge utilized a “1-of-1” decentralized verifier network (DVN) configuration via LayerZero, allowing the hacker to forge cross-chain messages and mint or release unbacked tokens without real collateral. The attacker used the unbacked rsETH as a security on Aave to borrow an estimated between $190M-236M of liquid assets such as Wrapped ETH (WETH). This resulted in huge bad debt as the collateral those loans were secured with was virtually worth nothing and the ETH pool utilization by Aave hit 100% and could not be drawn down further. This contagion led to a liquidity crisis and panic withdrawals of more than $16.2 billion. This withdrawal erased over a third of the total deposits of Aave, reducing its value to about 29.6 billion. This decline in total deposits indicates a widespread deleveraging of DeFi players who decided to reduce risk and transfer funds to perceived safety beyond the Ethereum restaking ecosystem. However, the futures contract associated with AAVE recorded a notable spike during this uncertain period. According to Coinglass data , the AAVE’s OI value has bounced from $211 million to $321 million in the last two weeks, registering a 52% surge. This spike indicates that market participants are still highly interested in building a leverage position in this asset to speculate a potential price move. If the trend continues, the AAVE price could deliver a strong move in near-term. AAVE Price Holds Key Support of Falling Wedge Pattern Since last week, the AAVE price plunged from $118.9 to $92.8 current trading value, registering a loss of 21%. Interestingly, this pullback showed a clear bear cycle within the formation of a classic bullish reversal pattern called falling wedge. The chart setup is characterized by two converging trendlines which typically signal a weakening bearish momentum. If pattern holds true, the AAVE price is likely to rebound from the pattern’s bottom trendline and surge roughly 20% to rechallenge the wedge pattern resistance at $111. AAVE/USDT -1d chart A potential breakout from this barrier will intensify the market buying pressure and push AAVE price towards $131 and $141 ceiling.

23 Apr 2026, 15:22

Majority of Kelp DAO exploit funds moved through THORChain

Kelp DAO exploiter has moved to launder nearly all stolen ETH, leaving only frozen funds within reach. According to blockchain analyst EmberCN, the attacker has routed roughly 75,700 ETH through cross-chain liquidity protocol THORChain, converting the assets into Bitcoin and generating about $910,000 in fees for the platform. The attacker began moving funds earlier this week, when the funds were split across newly created wallets before being cycled through THORChain and privacy tool Umbra. Arkham data shows the attacker’s primary wallet has now been largely emptied. Transaction flows point to a clear attempt to exit positions rather than hold the proceeds, with Arkham noting that the “attackers are executing an exit strategy rather than sitting on the proceeds.” Movement through THORChain has made the trail harder to follow, reducing the likelihood of recovering the funds. As of publication time, only a portion of the stolen assets remains contained. Arbitrum’s Security Council has frozen 30,766 ETH tied to the exploit and transferred it into an intermediary wallet, where it can only be accessed through governance approval. The network said the intervention was carried out without disrupting operations, adding that it acted “with input from law enforcement as to the exploiter’s identity” while prioritising the integrity of the ecosystem. Laundered funds narrow recovery window Five days earlier, the attacker had drained around 116,500 restaked Ether from Kelp DAO’s LayerZero-based bridge, an exploit valued between $290 million and $293 million at the time. Part of those assets was later used within Aave, where the attacker posted rsETH as collateral to borrow against the protocol. Efforts to contain the fallout are still ongoing. “Our priority is our users, and every decision we are making is aimed at an orderly return to normal market conditions and the best possible outcome for everyone involved,” Aave founder Stani Kulechov said in a recent X post. Meanwhile, the Kelp DAO team has confirmed that work is underway toward a “suitable resolution” while focusing on safeguarding users and “strengthening the protocol.” So far, initial containment measures have helped limit some damage. Kelp DAO paused contracts and blacklisted attacker-linked wallets, preventing an additional 40,000 rsETH, worth roughly $95 million, from being drained. Investigations into the breach have pointed to weaknesses in the bridge’s security setup. Preliminary findings from LayerZero suggested that compromised RPC nodes allowed a fraudulent cross-chain message to pass verification, with criticism directed at the use of a 1-of-1 validation configuration. Kelp DAO has contested that claim and has argued that the setup followed default documentation and had been previously confirmed as appropriate. The post Majority of Kelp DAO exploit funds moved through THORChain appeared first on Invezz

23 Apr 2026, 15:17

Circle economist outlines Aave proposal as USDC liquidity dries up after DeFi exploit

Aave's USDC market faces liquidity strain, as a proposal suggests higher rates to attract capital and ease withdrawals.

23 Apr 2026, 14:38

JPMorgan says persistent security flaws curb DeFi’s institutional appeal

A $20 billion hit from the KelpDAO exploit highlights systemic risks, while flat ETH-denominated growth and a shift to stablecoins point to ongoing fragility in DeFi.

23 Apr 2026, 14:00

DeFi Just Lost $15 Billion in Three Days. Something Deeper Than a Hack Is Behind It

DeFi is having one of its most difficult weeks in recent memory. What started as a single exploit on April 19 has since cascaded into a system-wide liquidity shock that has rattled confidence across the ecosystem and raised questions that go well beyond the incident itself. Related Reading: Another $142M Staked – Bitmine Tightens Its Grip on Ethereum Supply The event began at Kelp DAO, where an attacker identified and exploited a critical flaw in the protocol’s collateral system. To understand what happened, it helps to understand what rsETH is supposed to be. Under normal conditions, rsETH is minted when a user deposits ETH as staking collateral — it functions as a receipt, backed 1-to-1 by the underlying asset. The design is straightforward: deposit real ETH, receive a token representing it. The attacker found a way around that requirement entirely. By exploiting a flaw in the system, they minted rsETH without depositing any ETH at all — creating tokens that looked legitimate but were backed by nothing. Those tokens were then deposited as collateral on Aave, one of DeFi’s largest and most trusted lending protocols, and used to borrow real assets: actual ETH, actual stablecoins. The result was up to $230 million in potential bad debt sitting inside a protocol that had no role in creating it. The exploit itself lasted hours. The damage it triggered is still unfolding. $15 Billion Left in Three Days. The Numbers Tell the Rest The market’s response to the exploit was swift and unambiguous. According to XWIN Research Japan, Aave’s total value locked fell from approximately $45 billion to $30 billion in just three days — a 33% decline representing $15 billion in deposits withdrawn by users who decided the risk was no longer acceptable. That pace of exit does not reflect orderly risk management. It reflects fear. The stress showed up across the system simultaneously. Borrowing rates for USDT and USDC surged from approximately 3.4% to 14% as demand for liquidity spiked against a shrinking supply of available capital. Holders began moving AAVE tokens into exchanges at elevated rates, confirming that they were driving the selling pressure visible in the price rather than simply marking positions down. USDe supply contracted 14% over the same three-day window, reflecting reduced demand and continued capital withdrawal from the broader DeFi ecosystem. Taken together, the data describes something more serious than a price correction. It describes a confidence withdrawal — users and capital are moving away from DeFi, not because prices fell, but because the event raised doubts about whether the protocols they trusted were adequately designed to prevent exactly this kind of outcome. XWIN Research Japan frames the recovery challenge with precision: the issue is not price volatility, it is trust. Stronger protocol security, better collateral diversification, and more resilient liquidity design are the prerequisites — but none of them matter until users believe the system has genuinely changed. In DeFi, trust is not a soft metric. It is the entire foundation. Related Reading: Ethereum Coinbase Premium Flips Bullish: Discover What Happens When US Whales Are Long AAVE Struggles to Stabilize as Downtrend Structure Remains Intact AAVE continues to trade under a clear bearish structure. The price is hovering near the $90–$95 region after failing to sustain a recent relief bounce. The daily chart shows a persistent sequence of lower highs and lower lows since late 2025. Confirming that the broader trend remains firmly to the downside despite intermittent recovery attempts. The latest move highlights that weakness. AAVE briefly pushed toward the $110–$115 area, testing the declining 50-day moving average, but was rejected quickly and sold back into its prior range. That rejection reinforces the role of dynamic resistance. Both the 50-day and 100-day moving averages are trending downward, capping upside momentum. Related Reading: $2 Billion In Ethereum Leverage Just Evaporated: This Is What Happened Last Time Volume behavior adds context. The recent spike in selling volume during the drop back toward $90 suggests active distribution rather than passive drift lower. Buyers have stepped in around this level multiple times. Establishing it as short-term support, but the lack of follow-through on rebounds indicates limited conviction. If $90 fails to hold, the structure opens the door to a deeper move toward the $80 region, where the next meaningful demand zone likely sits. On the upside, AAVE would need to reclaim $110 with strength to begin challenging the broader downtrend. Until then, rallies appear corrective rather than structural reversals. Featured image from ChatGPT, chart from TradingView.com