A KelpDAO bridge exploit on April 18 left Aave with about $195 million in bad debt after roughly 116,500 unbacked rsETH, worth around $292 million to $294 million, entered DeFi markets and were recognized as collateral. Aave froze markets after the incident, while SparkLend avoided material losses by relying on pre-built rate-limited deposit and borrow caps, lower rsETH exposure and an oracle killswitch that could halt activity tied to the asset if price feeds failed. SparkLend had maintained a 72% loan-to-value ratio on its rsETH positions ahead of the attack and later drew between $1 billion and $1.7 billion in new deposits as users shifted funds. The SPK token rose by about 50% to 78% in the aftermath, while Aave’s total value locked fell sharply before partially recovering. The episode underscores how structural risk controls in DeFi lending can limit contagion from bridge failures before manual market freezes become necessary.