A sharp rotation of capital is underway in DeFi following the KelpDAO rsETH incident, with Spark emerging as a primary beneficiary. Billions have flowed out of Aave into Spark, led by whales and major protocols, even as Aave outflows begin to stabilize.
Whales Move Billions From Aave to Spark After KelpDAO Incident
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Key Takeaways:
- KelpDAO rsETH incident on Apr 18 triggered $2.4 billion inflows to Spark, with Aave seeing over $1 billion in outflows.
- Whales, Mellow Finance ($180 million) and Instadapp ($88 million) shifted funds, boosting Spark’s Peg Stability Module (PSM).
- Aave withdrawals slow as HTX, MEXC move $500 million+, while DeFi capital rotates across protocols.
Spark Draws Over $2 Billion in Inflows as Aave Sees Post-Incident Exodus
A significant reallocation of capital across decentralized finance platforms has taken shape in the days following the April 18 KelpDAO rsETH incident, with Spark positioning itself as a major beneficiary of the shift.
Since the event, Spark has recorded approximately $2.4 billion in net deposit inflows, a figure that represents more than 15% of Aave’s concurrent net redemption outflows. The movement underscores a broader market response, with users seeking alternative venues for capital deployment amid heightened risk sensitivity.
Data indicates that at least 20 individual wallet addresses have each deposited more than $20 million into Spark during this period. Notably, Spark’s Peg Stability Module (PSM) has emerged as the largest single destination for these inflows. The same entity also ranks among the most significant withdrawers from Aave, highlighting a direct pipeline of liquidity migration between the two platforms.
Institutional and protocol-level participation has reinforced the trend. Mellow Finance alone has redirected more than $180 million withdrawn from Aave into Spark. Instadapp, another prominent DeFi protocol, has contributed net inflows exceeding $88 million. Beyond these entities, a wave of large holders has followed a similar path, signaling sustained demand for lending strategies, nested yield opportunities, and improved capital efficiency.
Liquidity on Aave Contracts Post-rsETH
The broader context reveals a marked contraction in Aave’s liquidity following the rsETH disruption. Total net outflows from the platform have surpassed $1 billion since April 18, although the pace of withdrawals has begun to moderate.
More than 20 addresses have each withdrawn upwards of $100 million from Aave over the same period, reflecting concentrated activity among high-value participants. Among centralized exchanges, HTX and MEXC have maintained some of the largest positions on Aave. While HTX executed rapid withdrawals, MEXC appears to be navigating a slower exit. Its associated wallets have collectively withdrawn over $500 million, with approximately $95 million in USDT still pending due to liquidity constraints.
Spark’s PSM stands out as the largest identifiable withdrawal address from Aave, having redeemed more than $310 million before reallocating those funds into Spark’s lending ecosystem.
Other notable entities participating in large-scale redemptions include Ethena, Abraxas Capital Management (Heka Funds), Grove Finance, and Metalpha, among others.
Despite the turbulence, market behavior suggests that capital is not exiting DeFi altogether but is instead being repositioned. The steady inflows into Spark indicate that appetite for on-chain yield and leverage strategies remains intact, even as participants reassess counterparty and protocol risks in real time.
