Sell-offs intensified after the Kelp DAO hack for $292 million on April 18. As a result of the attack, 116,500 rsETH was withdrawn through a compromised cross-chain bridge based on LayerZero.
According to DefiLlama, Ethereum, which accounts for 53.91% of total TVL in DeFi, has lost 17.91% of its locked value over the past month. The network now holds $46.17 billion compared to more than $56 billion before the series of hacks.
Is Capital Leaving DeFi
The data shows a clear trend: money is leaving DeFi. The sector’s decline is reminiscent of previous risk-off periods, but this time the scale of the drop looks especially significant.
Solana lost 19.04% over the month, despite a slight increase of 0.17% for the week. BSC fell by 5.61%. Even Bitcoin DeFi, which previously grew by 71.60% in a month, dropped by 1.91% in the last 24 hours amid a market chain reaction.
Some individual networks suffered the most. Mantle fell by 52.01% over 30 days, from more than $600 million to $303 million. Ink lost 34.80%. Katana fell by 18.65%. Hyperliquid L1 dropped by 17.73%. Arbitrum, previously considered a relatively safe zone for DeFi, lost 16% over the month.
Only two networks in the top 20 showed growth. Tron added 24.07%, and OP Mainnet grew by 82.11%. Both networks saw an inflow of stablecoins as some capital sought safer options outside the Ethereum ecosystem with restaking.
Image caption: Total TVL in DeFi. Source: DeFiLlama
Kelp DAO Hack Triggers Chain Reaction in DeFi
The $292 million exploit targeted the cross-chain infrastructure of Kelp DAO. Attackers used spoofed RPC nodes and a DDoS attack to bypass verification through a single verifier and, within minutes, withdraw funds from the Ethereum and Arbitrum networks.
The effect quickly spread across the market. Aave urged WETH providers to withdraw funds due to risks associated with rsETH, prompting a multi-billion dollar outflow from the largest DeFi lending protocol. Ethena, Curve, ether.fi and Tron DAO froze their LayerZero-based OFT bridges as a precaution.
See also: CLARITY Act Nears Finish Line, Bringing Crypto Market Closer to US Rules
At LayerZero Labs the attack was linked to the TraderTraitor group, a division of Lazarus, which was previously involved in the recent Drift Protocol hack.
Are Users Overestimating DeFi Risks
The drop in TVL suggests that users have started to reassess cross-chain infrastructure risks. Kelp, which until recently was among the largest protocols with TVL over $2 billion, now faces the question of whether it can ever regain trust and compensate losses.
Some networks have dropped especially sharply. Plasma lost 28.99% in just a week, Ink — 33.3%. This looks more like active fund withdrawal than a typical price decline.
Ethereum still leads with a 53.91% share of total DeFi TVL. Next are Solana with 6.49%, BSC with 6.34%, Bitcoin with 5.91% and Tron with 5.89%. But dominance itself no longer looks like a sign of strength. Rather, it signals that the overall market is shrinking.
The main question now is different. Is this a temporary market reaction or the start of a deeper reassessment of risks related to bridges and restaking?
