Aave Exploit: $292M Affected, Arbitrum Freezes $71M ETH
The Aave decentralized finance protocol was impacted by an incident involving KelpDAO's $rsETH, resulting in approximately $292 million in affected funds. The exploit involved forged messages via a compromised verifier and the printing of fake collateral, a method reminiscent of past oracle manipulation. This occurred amidst Aave incurring bad debt.
In response, Arbitrum froze 30,766 $ETH, valued at $71 million. The Security Council transferred these funds, linked to a suspected North Korean exploit, from the hacker's address to an intermediary frozen wallet. The Wrapped Ethereum ($WETH) reserves on Aave's Ethereum Core V3 market have also been unfrozen.
The $AAVE token price initially fell 15% to $90.11, currently trading at $92.57, reflecting a 0.9% gain over the past 24 hours but an 8.0% decline over seven days. Aave reported $284 million in revenue and $2.1 billion in fees but did not utilize these funds for a self-bailout. Ethena's $USDE was impacted, experiencing a significant market cap decline. Kelp DAO Restaked ETH ($rsETH) saw a 13.2% gain over 24 hours but a 17.4% decline over seven days, trading at $2092.99.