Aave V3 lost $4B in liquidity in 29 hours after the Kelp DAO rsETH bridge exploit.

Following the Kelp DAO rsETH bridge exploit, Aave V3 shed $4.0 billion in available liquidity within 29 hours — a stress test the protocol's core contracts ultimately survived, but not without a serious scare. WETH utilization on Aave hit 100% in just 1.4 hours, a full seven hours before the Protocol Guardian stepped in to freeze affected markets.

The timeline is the critical detail: borrowers and LPs had already moved before any circuit-breaker fired, meaning the freeze was reactive, not preventive. The bridge — not the lending contracts — was the failure point, but the contagion path ran straight through Aave's liquidity layer.

The episode underscores a structural vulnerability in restaking-backed collateral: when a bridge breaks, the downstream protocol absorbs the shock whether or not its own code is clean.