$1B Flows Into SparkLend as Aave TVL Drops Post-Kelp Exploit - Crypto Economy

Following the Kelp bridge exploit on April 18, the DeFi lending landscape is undergoing a massive restructuring. Data from DefiLlama reveals that the SparkLend protocol recorded an inflow of over $1.4 billion in deposits, raising its Total Value Locked (TVL) from $1.89 billion to $3.3 billion as of April 22, 2026. This capital migration coincides with the crisis of confidence in Aave, where attackers deposited counterfeit funds to extract real liquidity.

The market impact was drastic: Aave’s TVL plunged by approximately $10 billion in just four days, dropping from $26 billion to $16 billion. The attack on Kelp allowed the exploiter to use unbacked rsETH as collateral to borrow nearly $190 million in WETH, leaving Aave with an estimated bad debt of between $124 million and $230 million. While Aave freezes markets to contain damages, the surge in active loans on SparkLend suggests that users are not only seeking refuge but are moving their credit operations permanently.

The DeFi ecosystem faces a trial by fire that has shifted liquidity dominance toward protocols with lower exposure to bridge risks. The next step for investors will be to monitor the Aave Safety Module’s capacity to cover the deficit and whether SparkLend’s growth trend consolidates as the new security standard in lending.

Source:https://defillama.com/protocol/sparklend

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