Aave, one of the largest decentralized lending platforms, has effectively frozen its operations as all major markets hit 100% utilization, preventing users from withdrawing approximately $5 billion in stablecoins, including USDT and USDC. The crisis originated from a $292 million exploit of the Kelp DAO rsETH bridge, which allowed an attacker to mint unbacked collateral that was then used to borrow nearly $200 million in Wrapped Ether (WETH). Following this exploit, a classic bank-run dynamic ensued, draining about $6.6 billion from Aave in less than 24 hours. Security experts warn that without liquidity for liquidations, Aave is facing a compounding bad debt situation that could lead to its inability to recover without external support. Natalie Newson, a senior blockchain security researcher at CertiK, emphasized that Aave's predicament highlights the risks inherent in decentralized finance (DeFi), where a single point of failure can have widespread repercussions across the system. Aave's risk framework had anticipated such a scenario, noting that at 100% utilization, no liquidity remains for withdrawals, leaving depositors unable to access their funds.