Overview
- On April 18 a compromised LayerZero-linked bridge minted about 116,500 unbacked rsETH worth roughly $292M–$294M and the attacker deposited that rsETH into Aave to borrow about $190M, producing widely cited bad-debt estimates near $195M.
- Aave froze its rsETH and WETH markets after the borrows and suffered heavy outflows that analysts say reduced its total value locked by between $6B and more than $10B from prior peaks.
- Aave’s community has launched a DAO-run fundraising effort targeting $200M to cover losses and has raised about $160M so far with notable contributions including Mantle and on-chain participants.
- SparkLend avoided material losses because it had prebuilt rate limits, an oracle killswitch and reduced rsETH exposure, and it absorbed an estimated $1.4B–$1.7B in new deposits that doubled its TVL in days.
- The incident shows how bridge failures propagate risk: minted, unbacked tokens can be accepted as collateral by lenders and trigger liquidity stress across pooled lending markets, and the final remedy will depend on Aave governance, any fund recoveries and wider bridge-security fixes.