Aave V3 lost $4 billion in liquidity in just 29 hours following the exploit of the Kelp DAO rsETH bridge, according to Glassnode. The incident caused WETH utilization on Aave to hit 100% within 1.4 hours, while the Protocol Guardian froze contracts only seven hours later, resulting in significant user losses. The event reignited fears about DeFi security and the effectiveness of governance safeguards.
Amid the turbulence, Aave's newly deployed Monad market topped $100 million in deposits in roughly two days after the launch of V3 on the Monad network. Backed by a $15 million incentive package from the Monad Foundation and additional GHO commitments from the Aave DAO, the market launched with 12 assets including USDC, WETH, and cbBTC. While the rapid inflow highlights strong early demand, analysts caution that a portion of the TVL may be incentive-driven rather than organic, and sustainability remains uncertain once rewards normalize.
