DeFi TVL drops 14% after KelpDAO exploit as risk appetite…

Decentralized finance's total value locked has shed roughly 14% since the KelpDAO exploit rattled the restaking sector, as investors pull capital from on-chain lending and yield protocols in a broad risk-off rotation. KelpDAO, a liquid restaking protocol built on EigenLayer, suffered an exploit that exposed vulnerabilities in the restaking narrative that had been one of DeFi's primary growth drivers heading into 2025.

The 14% TVL contraction is notable because it tracks not just direct outflows from KelpDAO but a wider retreat across lending markets and yield aggregators — suggesting the damage to sentiment extends well beyond the directly affected protocol. When a restaking venue is compromised, the contagion logic is straightforward: users question the security assumptions of every protocol that shares similar architecture or collateral types.