rsETH Outflows Drive Capital Shift from Aave to Spark

rsETH outflow drives AAVE net deposit loss while Spark sees net inflow

Since April 18, Spark protocol has recorded $2.4 billion in net deposit inflows, equivalent to roughly 15-20% of Aave's redemption outflows, according to data from @defioasis. At least 20 single addresses net-deposited over $20 million each into Spark after that date. Spark PSM emerged as the largest net depositor and simultaneously one of the biggest entities redeeming from Aave. Mellow Finance moved over $180 million redeemed from Aave entirely into Spark, while Instadapp contributed over $88 million in net Spark deposits. Beyond DeFi protocols, numerous whale addresses that redeemed from Aave also redirected funds to Spark.

The market interpretation is that Spark's safety mechanisms — particularly its more conservative risk parameters and liquidation logic — are viewed as more robust in the wake of the Kelp rsETH LayerZero bridge exploit, which exposed vulnerabilities in how Aave handled the undercollateralized rsETH position.

See link: https://x.com/defioasis/status/2047506600529981463

DeFi protocols rally to prevent rsETH contagion

Multiple protocols have joined an Aave-led coordinated rescue effort to address the rsETH deficit caused by the Kelp LayerZero bridge attack.

Lido submitted a proposal on its Research Forum to allocate up to 2,500 stETH to the rescue mechanism.

EtherFi Foundation pledged 5,000 ETH.

Ethena committed funds as part of the overall recovery plan.

Aave founder Stani Kulechov personally contributed 5,000 ETH to the DeFi United rescue effort.

LayerZero, whose bridge was the attack vector, is participating in the industry-wide recovery and coordinating with Aave, EtherFi, Ethena, Arbitrum, and Kelp.

Ink Foundation and Golem Foundation (alongside Golem Factory, contributing 1,000 ETH combined) also joined the coalition.

All commitments are conditioned on being part of a comprehensive plan that fully covers the rsETH gap, aiming to minimize DeFi spillover and enable orderly resolution for affected users.

See announcement: https://x.com/ether_fi/status/2047393577920299364

Tether freezes $344 million USDT on TRON after Justin Sun's centralization claim

Justin Sun announced on X that TRON is "the most centralized chain". The remark, widely interpreted as either a boast about TRON's lack of censorship resistance or an ironic commentary on-chain governance, intepreted as 'fraud USDT can be freely transferred'.

Shortly after, Tether froze $344 million worth of USDT on TRON — one of the largest single freezing actions on the network to date. The freeze underscores the tension between TRON's centralized architecture, which enables rapid compliance actions, and the broader DeFi community's preference for credible neutrality. Sun's statement inadvertently highlighted that TRON's centralization cuts both ways: while it allows unfettered movement of funds, it also gives stablecoin issuers like Tether the ability to act swiftly when flagged addresses are identified.

See link: https://whale-alert.io/alerts.html

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