Sharks dumped over $6 million worth of AAVE as the KelpDAO attack caused AAVE price to drop 20%.

AAVE (AAVE) dropped more than 20% on April 19, 2024, after the KelpDAO rsETH mining incident caused many whales to sell off their holdings en masse, and the ETH usage rate on the lending platform surged to record levels.

The Token price plummeted from around $115 to below $92 in just a few hours as large investors rushed to withdraw their positions. AAVE 's ETH pool reached 100% utilization, preventing remaining depositors from withdrawing their funds.

Whales sell off millions of dollars worth of stock. AAVE

At the time of writing, AAVE is trading at $91.89, down 20.44% in the last 24 hours. The price of this altcoin has returned to the lows seen on April 13, 2024.

on-chain data from Lookonchain shows that three large wallets sold off significant amounts of AAVE just hours after information about the mining operation leaked.

• A wallet named smaugvision sold 20,015 AAVE , receiving 2.06 million USDC at an Medium price of 103 USD/ Token.
• Another whale at address 0xFC56 also sold 20,000 AAVE for $2.05 million USDC, a similar Medium price.
• The third wallet, 0xA2E4, sold 19,666 AAVE worth $1.95 million, exchanging them for 505.65 ETH and 10.11 WBTC at a lower Medium price of just $99.

In total, these three wallets sold nearly 60,000 AAVE for a combined value of over $6 million.

Over $5.4 billion worth of ETH was withdrawn from AAVE

In addition to the sell-off of AAVE, many providers also began withdrawing ETH en masse from the AAVE protocol. Over $5.4 billion worth of ETH was withdrawn from the platform in just a few hours.

TRON founder Justin Sun also withdrew 65,584 ETH , worth nearly $154 million, further exacerbating the liquidation shortage.

This wave of mass withdrawals caused AAVE 's ETH utilization rate to reach 100%, leaving many depositors unable to withdraw further funds as the pool ran out of liquidation.

Borrowing interest rates are expected to rise sharply as interest rates on the protocol's interest rate chart will increase with high usage.

Whether AAVE 's umbrella backstop mechanism and the freezing of the rsETH market will help restore confidence to those still trapped in the pool remains a big question.

AAVE stated that the incident only affected the ETH V3 market.

AAVE confirmed to BeInCrypto that this incident only affects the ETH V3 market, while V4 remains completely unaffected.

“On AAVE side, the issue is limited to the ETH V3 market. V4 is completely unaffected,” the AAVE team responded via a private email to BeInCrypto.

The AAVE operations team also stated that they quickly implemented preventative measures such as freezing the rsETH pool , removing borrowing rights, and temporarily reducing the maximum lending ratio on ETH to 0.

The stablecoin pool and other assets on AAVE are currently operating normally and are unaffected by this incident.