1inch Co-Founder Urges Caution for Aave Users After Major DeFi Hack
Exclusive: 1inch co-founder has blunt advice for Aave users
Thestreet
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The recent hack of the Kelp protocol, resulting in a loss of approximately $293 million, has raised concerns among decentralized finance (DeFi) users. Sergej Kunz, co-founder of 1inch, advises Aave users to avoid lending markets with weak risk management and suggests moving towards an intent-centric model to mitigate risks in the DeFi space.
- 01The Kelp protocol was hacked for approximately $293 million, impacting Aave's lending market.
- 02Sergej Kunz warns that the shared-pool model in DeFi exposes users to risks from weaker collateral.
- 03Aave's total value locked (TVL) dropped significantly from $26.39 billion to $16.53 billion after the incident.
- 04Kunz suggests an intent-centric model to limit risk exposure in DeFi protocols.
- 05Users are advised to avoid lending markets that can be controlled by administrators whose keys may be compromised.
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The crypto industry experienced a significant setback when the Kelp protocol was hacked on April 18, 2026, leading to a loss of approximately $293 million. The hackers exploited the LayerZero bridge, minting 116,500 rsETH without backing and subsequently used it as collateral to borrow around $195 million from Aave, a leading decentralized finance (DeFi) lending protocol. This incident triggered a wave of panic withdrawals, causing Aave's total value locked (TVL) to plummet from $26.39 billion to $16.53 billion. In response, Sergej Kunz, co-founder of 1inch, criticized the shared-pool model used by Aave, stating that it socializes risk across all participants, exposing even those who lend stable assets to potential losses. He proposed an intent-centric model that would allow users to specify their collateral and loan terms, thereby containing risks to those who accept exposure. Kunz emphasized that users should avoid lending platforms with weak risk management and admin key vulnerabilities to safeguard their investments.
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This incident highlights the vulnerabilities in DeFi lending protocols, potentially affecting users' trust and investment strategies.
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