After the Kelp hack, deposits in the leading lending protocol Aave plummeted by 35%, dropping from $45.8 billion to $29.6 billion. This was highlighted by on-chain analyst EmberCN. 

The total deposits on Aave have fallen below $30 billion. From $45.8 billion before the rsETH incident to now $29.6 billion, a decrease of $16.2 billion. https://t.co/kxalj1cZ4y pic.twitter.com/8QoI2tl8S8

— 余烬 (@EmberCN) April 23, 2026

The platform's Total Value Locked (TVL) continues to decline, currently standing at $15.1 billion, down from over $26 billion on April 18. 

Source: DefiLlama. 

The native Aave token remains in a downward trend, with AAVE prices dropping 13.8% over the past week. As of now, the asset is trading around $91.4. 

Hourly chart of AAVE/USDT on Binance. Source: TradingView. 

The Kelp hacker continues to launder funds. According to EmberCN, in just a day and a half, the hacker has nearly fully converted the stolen 75,700 ETH ($175 million) into Bitcoin via THORChain. 

In just a day and a half, the KelpDAO hacker's 75,700 ETH ($175 million) has now mostly been converted to BTC.

The hacker primarily used THORChain for cross-chain swaps, generating $800 million in trading volume and $910,000 in platform fees for THORChain.

—————————————————-#Bitget VIP… https://t.co/YHNjV4jTGy pic.twitter.com/QMsFhsjWFx

— 余烬 (@EmberCN) April 23, 2026

Thanks to this activity, the trading volume on the platform exceeded $800 million, with fee revenue reaching $910,000, the expert noted. 

Addressing the Issue 

To stabilize liquidity and halt the outflow of funds from Aave, the Fluid project has launched the aWETH redemption mechanism.

The aWETH Redemption Protocol is now live on @Arbitrum and @Base.

After processing over $400 million in redemptions on Aave Ethereum, we're expanding to L2s.

This time, we’ll be opening up for all loopers to unwind while ETH lenders exit to LSTs.

How it works 🧵 https://t.co/lMhmsl8vAL pic.twitter.com/JmxdxUZnHP

— Fluid 🌊 (@0xfluid) April 22, 2026

In 48 hours, 166,772 aETH (approximately $400 million) were processed through this mechanism, allowing users to convert frozen assets into wstETH or weETH.

This tool is based on the Lite Vault Fluid, which holds wstETH and weETH as collateral for ETH loans on Aave, enabling direct closure of opposing positions.

The redemption occurred at a discount of about 2.2%. In comparison, aWETH was trading at a discount of up to 23% on the secondary market, according to Castle Labs.

Meanwhile, Circle's Chief Economist Gordon Liao proposed raising the interest rate on USDC on Aave v3.

A proposal on AAVE USDC market and liquidity parameters from Circle's Chief Economist @gordonliao https://t.co/7wX3TWIHop

— Jeremy Allaire — jerallaire.arc (@jerallaire) April 22, 2026

The stablecoin pool on the platform has been fully utilized for four consecutive days, with available liquidity dropping below $3 million, a decrease of $60 million in one day. The variable interest rate for loans is capped at around 14% and is not clearing the market.

Following the Kelp hack, Aave saw around $300 million in new borrowings. Some borrowers are largely unresponsive to the rate: 14% annually is a small price to pay to exit a position. However, liquidity providers, noticing the emptiness of the pool, are demanding a higher premium.

Liao suggested making the rate progressive: the more funds are borrowed, the higher the rate. At 95% utilization, it would be 37%, and at 100%, 53%. This would compel borrowers to repay debts and attract new liquidity.

Community members criticized the idea. Avant protocol founder Rhett Shipp stated that raising rates would not stop the outflow of funds from Aave. 

You need to fire your chief economist. This will accelerate capital flight from both Aave and USDC.

If you want Morpho and USDT to win, this is a great idea.

— Rhett Shipp (@RhettShipp) April 22, 2026

Recall that on April 21, the Arbitrum security council took "emergency measures" and froze 30,766 ETH (~$71.2 million) stolen from Kelp.