AAVE fluctuated 20.3% within 24 hours, surging to $116.08 before falling back to $96.53: KelpDAO rsETH vulnerability triggers AaveV3 bad debt panic

Brief Overview of Volatility

Over the past 24 hours, AAVE's price quickly dropped from a high of $116.08 to a low of $96.51, with the current quote at $96.53, marking an overall amplitude of 20.3%. The 24-hour trading volume is about $117 million, larger than the previous day but without extreme anomalies.

Analysis of Reasons Behind the Fluctuation

- KelpDAO rsETH Vulnerability Incident: On-chain reports indicate that KelpDAO's liquid restaking token rsETH may have been attacked, with losses estimated between $100M and $293M. The attacker used stolen rsETH as collateral in Aave V3 and borrowed a large amount of ETH. As rsETH's value collapsed, these positions faced huge bad debt risks, directly causing AAVE's price to drop more than 10% in 15 minutes.

- Brief Boost from Earlier V4 Launch: 24 hours ago, AAVE briefly surged by 7% due to the V4 upgrade and a $350M protocol fund injection, but panic selling dominated after the incident was revealed.

Market Views and Outlook

The mainstream sentiment in the community has shifted to panic. Discussions on X focus on the impact of rsETH bad debt on Aave TVL and confidence in DeFi. Bears dominate in the short term, warning of further downside to the $88 support level. Some analysts suggest that if bad debts are managed well, V4 still has long-term potential, but risk aversion is advised for now.