Crypto Fear and Greed Index Rises to 27, Market "Fear" Sentiment Slightly Eases

April 19: Crypto influencer benmo.eth issued a statement noting the KelpDAO rsETH hack has far-reaching repercussions, with blame falling on both KelpDAO and LayerZero. He outlined the following potential impacts of the incident: - Wrapped assets like LRT (Liquid Restaking Tokens) can’t match the security of native assets. Lending protocols shouldn’t treat them as equivalent collateral. - LayerZero may lose cross-chain market share going forward. Several assets—including usde and usd0—have stopped using its cross-chain solution. Even if business resumes, rebuilding its reputation will be extremely difficult. - Aave’s “security halo” has shattered, and unified lending market risks are again under whales’ scrutiny. Each new collateral asset adds extra risk to existing ones, which is unfair to native assets. Aave V4 and modular lending could emerge as future trends, speeding up the transition. The market will shift focus to the “lending business itself” rather than a single platfor

**April 19th Update:** Per Onchain Lens monitoring, KelpDAO sustained ~$294M in losses from a LayerZero bridge exploit. ZRO token plummeted from $2 to $1.4. A whale with a long ZRO position on HyperLiquid was partially liquidated, losing $2.88M. The whale still holds the position, now facing unrealized losses of over $750k, with total losses around $28.98M.

April 19th: LayerZero said in a post, “We have fully understood the rsETH exploit incident and have been actively collaborating with the KelpDAO team on fixes since the incident took place, while continuing to monitor the situation. All other applications remain secure. We’re currently working with teams like SEAL to confirm the root cause. Once we have all the details, we’ll publish a full post-mortem report alongside KelpDAO.”

On April 19, following an alert about a potential vulnerability in rsETH, the Aave Guardian proactively froze rsETH and wrsETH markets across all deployments. All Aave pools remain secure and operational. This incident stems from the rsETH asset itself—not a vulnerability in the Aave protocol. KelpDAO, LayerZero, and other teams are currently investigating the root cause, with Aave collaborating closely. **Aave V3**: The Guardian has frozen rsETH and wrsETH markets across all deployments. This freeze prevents new deposits and borrowing using rsETH as collateral; existing positions are unaffected. **Aave V4**: The Aave Protocol Safety Committee has implemented equivalent protective measures for Aave V4, disabling new supply and borrowing of rsETH. Relevant configuration updates were deployed via the Aave Core Hub and Kelp E Spoke.

April 19th — On-chain analyst Wu Jinyu notes that over $5.4 billion in assets were urgently withdrawn from lending platform Aave for hedging, after hackers borrowed a large amount of ETH using illegally minted rsETH. Justin Sun also pulled his 65,584 ETH (valued at $154 million) from the protocol. Subsequently, remaining on-chain borrowing demand shifted to platforms like Spark, pushing the network’s ETH deposit rate to a peak of 130%. It currently stands at 18%.

April 19th: Andre Cronje, co-founder of Sonic Labs and founder of Flying Tulip, said the team is still investigating the L0/rsETH incident. Initial reports suggest a private key leak or configuration error may have led to ~$200 million in rsETH being stolen. The stolen rsETH was then deposited into Aave to borrow ETH (given rsETH’s low liquidity). The position is technically collateralized; even without collateral, Aave’s token and safety module act as the first line of defense against defaults. Aave has no mechanism to reimburse users for losses, so extreme cases could trigger a "bank run." However, Aave currently holds ~$7 billion worth of ETH, compared to ~$100 million in withdrawal volume and $17 million in PUT exposure—limiting the overall impact. While the above is just our initial assessment, protecting user PUT liquidity remains our top priority. As such, we’ve withdrawn all ETH from Aave to our self-contained contract, as Aave’s available liquidity has fallen below our m