Over $1.7 billion in Ethereum (ETH) has been withdrawn from decentralized lending protocol Aave within a week, primarily driven by wallets linked to Tron founder Justin Sun and crypto exchange HTX. According to Aave contributor Marc Zeller, Sun-associated wallets extracted $646 million in ETH, while HTX—where Sun serves as advisor—removed a net $455 million. Combined with Abraxas Capital's $115 million exit, these withdrawals depleted liquidity, spiking borrowing rates above 10% and forcing the protocol into emergency stabilization measures.
Zeller criticized Sun's "unpredictable" movements, likening them to "grocery shopping," which exposed DeFi's vulnerability to uncoordinated whale actions. Simultaneously, Ethereum's validator exit queue surged to a record 625,000–627,944 ETH ($2.3 billion) amid profit-taking following ETH's 150% rally since April, creating a 10–11 day backlog for unstaking. This dual pressure tested Aave's liquidity mechanisms and Ethereum's staking infrastructure, disrupting leveraged "looping" strategies and triggering position liquidations.
Paradoxically, institutional staking demand grew, with BlackRock embedding ETH staking into products after May's SEC regulatory clarity. A record 36.39 million ETH (29.4% of supply) remains locked in staking contracts, signaling sustained institutional confidence despite short-term volatility.