DefiLlama Pushes Back on Aave TVL Inflation Claims After KelpDAO Hack

DefiLlama founder 0xngmi rejected claims that its Aave TVL is inflated by “looped liquidity,” saying borrowed assets are removed from the TVL calculation. He argued that when users deposit ETH and stETH and then borrow against the position, the borrowed amount nets out, so total TVL should not be artificially multiplied. The dispute intensified after the $292M KelpDAO exploit, described as the largest DeFi hack of 2026, which has drained nearly $10B from Aave. Aave’s TVL allegedly fell from about $26.4B on April 18 to roughly $17B as investigations continued, linked by some commentators to exposure to rsETH. 0xngmi also pointed to an earlier incident where Ethena’s collateral was being looped into Aave, which DefiLlama addressed by adding a custom exception to remove Ethena’s deposited TVL from its Aave TVL figures. While there is no direct proof presented that DefiLlama’s Aave TVL is currently wrong, the article highlights broader risk questions. Aixbt labs’ AI agent accused Chaos Labs (Aave’s risk manager) of approving an rsETH LayerZero configuration with a 1/1 DVN setup at 75% LTV, enabling $236M in bad debt. LayerZero said it will stop signing messages for 1/1 DVN apps and urged migration to multi-DVN setups. Traders should note: Aave TVL remains under pressure after the KelpDAO exploit, and governance and cross-chain configuration changes could drive volatility across lending and bridged-assets strategies. Aave TVL is now a focal point for both data-provider scrutiny and protocol risk reassessment.