Morning Minute: DeFi's Future in Question After $292M KelpDAO Exploit

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Morning Minute is simply a regular newsletter written by Tyler Warner. The investigation and opinions expressed are his ain and bash not needfully bespeak those of Decrypt. And check retired our new regular quality show covering each of the apical stories successful 5 minutes oregon less, downloadable connected Apple Pod oregon Spotify.

GM!

Today’s apical news:

• Crypto majors autumn past rebound arsenic Iran tensions escalate; BTC astatine $75.4k
• ETFs spot $1.4B successful inflows connected the week, 2nd biggest week of year
• DeFi TVL falls by $13B arsenic KelpDAO exploit fallout worsens; AAVE -25%
• Vercel CEO says “highly sophisticated” actors utilized AI for its exploit
• Asteroid meme holds astatine $150M marketplace headdress aft Elon says “ok” for SpaceX mascot

🔴 $292M Kelp DAO Exploit Triggers Aave Bank Run, $9B Leaves DeFi successful a Day

Saturday astatine 17:35 UTC, an attacker sent a azygous crafted connection to Kelp DAO’s LayerZero-powered cross-chain bridge.

The span accepted it arsenic morganatic and released 116,500 rsETH - astir $292 cardinal and 18% of full circulating supply—to a wallet that had been pre-funded done Tornado Cash 10 hours earlier. No ETH ever changed hands connected the different side. The rsETH was efficaciously minted from nothing. The attacker deposited it into Aave V3 and V4 arsenic collateral, borrowed existent wrapped ETH against it, and walked.

Aave didn’t get hacked. Its contracts are fine. But it’s present carrying astir $196M successful atrocious indebtedness it didn’t create, due to the fact that rsETH had been whitelisted arsenic ETH-correlated collateral—a faulty assumption.

In the aftermath, TVL connected AAVE dropped 25% from $26.4B to ~$20B successful a azygous time and continues to autumn by the day. Broader DeFi TVL fell by $13B. The AAVE token fell 30%.

ETH depositors trying to retreat recovered liquidity astatine zero, truthful they started borrowing stablecoins against their deposits to exit—a textbook slope run. SparkLend, Fluid, Upshift, and Lido each froze oregon paused rsETH exposure. rsETH holders connected 20+ chains present person tokens of uncertain backing.

Aave’s ain connection Sunday said rsETH connected Ethereum mainnet is “fully backed” but remains frozen “out of an abundance of caution.” But the harm has been done.

DeFi users are re-evaluating the calculus. Does it marque consciousness to hazard exploits for mean yield? And present each lending protocol has to reassess security. It volition instrumentality clip to rebuild from this, if it’s adjacent possible.

There person been $600M mislaid from DeFi via exploits successful conscionable the past 3 weeks. And the gait is accelerating…

Key Details:

• Kelp DAO’s LayerZero bridge was exploited Saturday for 116,500 rsETH (~$292M, 18% of supply); attacker minted unbacked rsETH and utilized it arsenic Aave collateral to get existent WETH; ~$196M successful atrocious indebtedness near connected Aave; AAVE -30%; largest DeFi exploit of 2026
• The contagion: Aave froze rsETH and WETH crossed Ethereum, Arbitrum, Base, Mantle, and Linea; TVL dropped $6.2B successful 1 day; ETH depositors borrowing stablecoins to exit triggered a slope tally dynamic; SparkLend, Fluid, Upshift, and Lido each froze rsETH exposure
• The structural issue: LRT tokens similar rsETH were whitelisted arsenic near-ETH collateral connected Aave, Compound, and Euler; this exploit assumes backing was intact astatine each times; it wasn’t; each DeFi lending protocol present needs to reassess liquid restaking token collateral risk

🌊 BTC Hit $78K; Then Iran Closed Hormuz Again

Friday was the astir convulsive 24 hours successful crypto markets since the warfare started.

Iranian FM Araghchi posted that the Strait of Hormuz was “fully unfastened to each commercialized vessels.” Trump followed connected Truth Social claiming Iran agreed to an “unlimited” suspension of its atomic programme and said a imperishable woody was “mostly complete.”

Bitcoin ran from $74.5K to $78,400 - its archetypal people supra $78K since February 4. Oil crashed astir 10% to ~$82/barrel. The S&P 500 closed astatine a grounds 7,121. There were $600M+ successful crypto abbreviated liquidations. The ETFs posted ~$800M+ successful inflows, the biggest successful months.

The vibes were euphoric.

By Saturday morning, tanker owners were receiving Iranian vigor transmissions closing the strait. State media said Hormuz had returned to “strict absorption and control.” BTC pulled backmost to ~$74K giving backmost its caller gains, Oil rebounded to $90 and banal futures are red.

And a instrumentality to warfare looks much apt than ever…

📅 Saylor Wants to Pay STRC Dividends Twice a Month

Strategy filed a preliminary proxy Thursday proposing to displacement STRC dividend payments from monthly to semi-monthly.

The yearly complaint stays astatine 11.5%, and the $1.2B full work is unchanged. Holders would conscionable person smaller checks each 2 weeks alternatively of 1 larger cheque per month. If approved, the archetypal semi-monthly outgo lands July 15.

The crushed this matters tin beryllium seen successful the STRC terms enactment implicit the past fewer months. Leading up to the dividend chopped disconnected day of the 15th, STRC trades astatine oregon supra its $100 par with expanding measurement until the 14th. Then it goes sub-par for a fewer weeks arsenic traders nary longer request to clasp for the dividend. Around the 1st of the month, it hits $100 par again and the rhythm repeats.

Well with semi-monthly dividend payments, Saylor could perchance erase that 2-week play wherever STRC trades sub-par. That would mean much imaginable superior for him to usage to bargain Bitcoin - and a safer clasp for those holding STRC.

Assuming this goes through, expect Bitcoin to payment (and possibly adjacent bigly)…

🚀 A Dying Girl’s Wish Made a Meme Coin Worth $175M

Liv Perrotto was 15 years aged erstwhile she died of crab successful January. Before she passed, she had designed a plush Shiba Inu named Asteroid that flew aboard SpaceX’s Polaris Dawn ngo successful 2024 arsenic the zero-gravity indicator. Her dying privation was simple: she wanted Elon Musk to marque Asteroid the authoritative SpaceX mascot.

Radio big Glenn Beck posted her communicative connected X Thursday night. Elon replied “Will reply shortly” astatine 11:50 PM ET. That effect unsocial was capable to nonstop the ASTEROID meme coin to a $30M+ marketplace cap.

But traders anxiously awaited Elon’s response. On April 18 successful the afternoon, they got it. Elon answered the girl’s questions for him and replied “OK” to the SpaceX last item, confirming Asteroid arsenic the authoritative SpaceX mascot.

The token instantly sent to $100M+ successful marketplace headdress wrong hours, reaching $190M+ overnight. It’s present trading adjacent $155M.

Now the question becomes—will Elon proceed leaning successful and really marque Asteroid Shiba the SpaceX mascot? Or was this a 1 disconnected response?

🌎 Macro Crypto and Markets

• Crypto majors are reddish but rebounding aft a large Sunday selloff; BTC -0.1% astatine $75.4k; ETH -1% astatine $2,316; SOL level astatine $85; HYPE -4% astatine $41.30
• SKY (+5%), CC (+4%) and M (+7%) led apical movers
• Oil +2% astatine $88; Gold adjacent astatine $4,780
• Stock futures red after record-breaking greenish streak
• Vercel’s CEO confirmed a breach traced to a compromised third-party AI instrumentality (Context.ai), which gave attackers entree to interior Vercel environments via a hijacked Google Workspace account; CEO Guillermo Rauch called the actors “highly sophisticated” and said they whitethorn person utilized AI to accelerate the intrusion
• Coinbase is deploying AI agents modeled aft legendary erstwhile executives directly into Slack and email; “Fred” is based connected co-founder Fred Ehrsam and acts arsenic a strategical readying agent; “Balaji” is modeled aft erstwhile CTO Balaji Srinivasan and is designed to situation assumptions and spark innovation
• Sam Altman’s World launched its biggest upgrade yet, bringing iris-scan proof-of-human verification to Zoom, Tinder, and performance summons sales; Tinder volition amusement a “verified human” badge, Zoom gets a deepfake-detection diagnostic called Deep Face, and Concert Kit lets artists reserve tickets for existent humans to artifact scalper bots

Corporate Treasuries & ETFs

• The Bitcoin ETFs saw $664M successful nett inflows on Friday, their biggest time successful months; the ETH ETFs saw $124M successful inflows
• ETFs overall saw $1.4B successful nett inflows last week according to information from CoinShares

Meme Coin Tracker

• Meme leaders were green connected the time and week; DOGE +1%, SHIB +31%, PEPE +1%, TRUMP +1%, PENGU +2%, SPX -1%, FARTCOIN -2%
• Asteroid (+150x), Belief (+400%), Zerebro (+40%), and Griffain (+39%) led notable onchain movers

💰 Token, Airdrop & Protocol Tracker

• Creator Fun launched this wekend with a trading terminal, launchpad, AMM and much calling itself “The iPhone infinitesimal for Solana”; its CRX token astatine $13M
• The RAVE token fell 90% aft a ZachXBT investigation

🚚 What is happening successful NFTs?

• NFT leaders rallied implicit the play but fell overnight; Punks -1% astatine 26.6 ETH, Pudgy -5% astatine 4.36 ETH, BAYC -6% astatine 7.85 ETH; Hypurr’s -1% astatine 386 HYPE
• Normies (+20%) and Nakamigos (+15%) led notable movers
• A PUNK token was airdropped to each Punk holders, soaring 200,000% to $10M successful its archetypal nighttime of trading