CryptoPulse_GLBL

Author: Climber, CryptoPulse Labs
On April 22nd, on-chain data showed that Aave's total deposits dropped from a high of $48.5 billion to $30.7 billion. Approximately $15.1 billion flowed out in a short period, with nearly one-third of the deposits being redistributed.
Meanwhile, funds didn't exit DeFi; instead, they were redistributed among different lending protocols. Morpho saw an outflow of about $1.5 billion, while Spark bucked the trend, experiencing an outflow of about $1.3 billion and absorbing funds from investors including Justin Sun and whales who made significant purchases in February.
On the surface, it appears that funds flowed from Aave to Spark, but in reality, it's a process of re-evaluating the credibility of on-chain lending protocols and their associated risks.

I. Aave Fund Outflow: A Massive Retreat After Risk Exposure
On April 18th, the Kelp DAO cross-chain bridge was attacked. The attackers minted approximately 116,500 rsETH tokens without real asset backing and deposited them into the Aave system for lending operations. This action directly triggered Aave's risk mechanisms, and Guardian subsequently froze the relevant assets.
However, what truly changed market expectations was not the freezing action itself, but the reassessment of on-chain risks following the attack.

On-chain analysis data shows that Aave's total deposits dropped from approximately $48.5 billion to $30.7 billion in just three and a half days. An outflow of approximately $15.1 billion, nearly one-third of the total funds, occurred. This level of change is not simply panic, but a systemic redistribution of funds.
At the same time, the structural changes in project funds are also very clear.
High-risk asset pools were withdrawn first, especially those related to cross-chain assets and derivative collateralized assets. Neutral assets remained within the Aave system. Institutional funds began to split their positions and diversify their flow to other lending protocols.
This indicates that the market's judgment is not to abandon Aave, but to redefine Aave's risk boundaries. Aave's problems are thus amplified because its risk mechanism is event-driven.
Assets are only frozen and repaired after entering the system and operating, and only when an anomaly occurs. However, from an institutional funding perspective, this signifies a core issue: risks are identified only after they are triggered, rather than being filtered before entering the system.
Therefore, in a lending market worth tens of billions of dollars, such structural differences directly impact the long-term retention tendency of funds.

II. Spark's Funding Logic: The Positive Result of Rules First
While Aave experienced a large-scale outflow of funds, Spark performed in the opposite way.

SparkLend TVL rose from approximately $1.9 billion to $3.2 billion, a short-term increase of about $1.3 billion. Furthermore, the funding sources exhibited a clear institutional characteristic, including Justin Sun and several large whales reallocating funds into the Spark system.
The key point is that this round of fund inflows was not because Spark performed better in this event, but because its risk structure itself is different.
Spark is backed by the MakerDAO (Sky) ecosystem, whose core logic is not to accept assets, but to screen them.
Even before the rsETH incident, Spark had already adjusted and even restricted risk parameters for related assets at the governance level. This decision wasn't based on whether Kelp DAO had vulnerabilities, but rather on a risk assessment of a long-term collateralized asset model.
This means that when Aave needed to handle risk during an event, Spark structurally prevented the risk from entering the system. In other words, the risk was cut off and isolated at its source.
Therefore, Spark didn't experience asset freezes, bad debt risks, or systemic shocks in this round of changes, so it absorbed a different type of funding that is more sensitive to rule certainty.
Institutional funds, in particular, are not concerned with a very high rate of return, but rather whether the risk was determined to be zero before entering the system.
Therefore, Spark doesn't offer higher returns, but rather a clearer funding path. For example, whether an asset can enter is determined by the rules. Once entered, the risk boundary is stable. Returns are a systemic structure, not a result of market fluctuations.
III. Will Spark become the next Aave?
If we only look at the flow of funds, it's easy to intuitively conclude that Spark has been absorbing funds flowing out of Aave. However, if we broaden our perspective, we'll find that the two are not even competing on the same level.

Aave represents the first stage of DeFi lending: an open market mechanism.
Here, assets enter freely, and the market determines interest rates and risk premiums. The advantage of this model is scale and liquidity, but the problem is that risks are often discovered after the fact.
Spark, on the other hand, represents the second stage: a pre-defined governance mechanism.
That is, assets are screened before entering the system. Risks are identified and addressed at the rule level in advance, rather than being dealt with after they are exposed in the market.
In other words, Aave is market-driven risk, while Spark is rule-driven risk.
Furthermore, from a funding perspective, this also signifies a structural change. The lending market is evolving from a single pool of funds into a tiered, multi-level system.
Therefore, Aave remains the largest and deepest general lending market, and its liquidity and asset coverage are irreplaceable in the short term. However, Spark is emerging as a structured entry point for stablecoins and institutional funds.
The relationship between the two is not one of substitution but rather a division of labor. Aave handles market liquidity, while Spark manages the rule-based funding pathways. Therefore, Aave will remain the leader in the lending market in the short term, while Spark still has a long way to go.
Conclusion
The Kelp DAO cross-chain bridge incident was merely a trigger; it didn't truly change the deposit size of a particular protocol, but rather the way funds perceive risk.
This shift in fund flows doesn't mean Aave is weakened, nor does it mean Spark will replace Aave. Rather, it means the lending market is moving from competition among single liquidity pools to a new phase of risk-stratified structures.

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Author: Climber, CryptoPulse Labs
In April of this year, the crypto industry suffered a series of major hacking attacks. At least 13 crypto protocols and platforms have been attacked to varying degrees, with total losses exceeding $600 million. The KelpDAO and Drift Protocol incidents alone resulted in losses exceeding $280 million each.
If we were to summarize the history of the crypto industry in one sentence, it would be quite straightforward: This is not an industry that gradually becomes more secure, but rather one that is constantly forced to upgrade by hackers.
From early exchange hacks to the collapse of DeFi cross-chain bridges, and now to the systemic fraud attack in the recent KelpDAO hack, almost every security evolution in the crypto world has stemmed from a larger hacking incident.

The following list of the top 10 crypto industry security breaches also demonstrates how hacking attacks have gradually changed the course of the entire crypto world.
I. Bybit (2025): The Collapse of the Multi-Signature Myth
The Bybit attack, occurring in 2025, is widely recognized as the largest single exchange hack in history, with losses estimated at $1.5 billion.
The most shocking aspect of this attack is not the amount, but the method.
The attackers did not break on-chain cryptography or directly compromise smart contracts. Instead, they penetrated the supply chain and interface layers, implanting visual deception into the multi-signature interface.
The signer saw a normal transfer request, but what was actually executed was a transfer to an address controlled by the hacker.
The entire process resembled a cognitive war rather than a traditional hacking attack. The industry significance of this event is very direct: multi-signature is no longer the ultimate security measure; the human user interface itself becomes the entry point for attacks.
II. Mt. Gox (2014): The First Collapse of Bitcoin Faith
Mt. Gox is a pivotal event that the entire crypto industry cannot ignore.
At the time, this exchange handled over 70% of global Bitcoin trading liquidity. The problem lay in its extremely weak internal security system. Private keys were stolen undetected for a long period, allowing funds to continuously drain away over several years.
This ultimately led to the theft of approximately 850,000 BTC, causing the platform to go bankrupt. The funds were worth about $450 million at the time; their current value is astronomical.
The collapse of Mt. Gox had a profound impact: for the first time, the crypto industry realized that exchanges did not equate to asset security.
Since then, cold wallets, multi-signature, and custodial segregation have become industry standards.
III. Coincheck (2018): The End of the Hot Wallet Era
The Coincheck incident occurred in Japan and was a classic example of a fundamental security failure.
The platform stored approximately $530 million worth of NEM tokens in hot wallets for an extended period without cold storage segregation or multi-layered access control. Attackers encountered almost no resistance after the intrusion and transferred the funds directly.
The entire process was less about technical countermeasures and more like a system management failure.
Following this incident, Japan's Financial Services Agency (FSA) quickly tightened regulations, requiring exchanges to increase their cold storage ratios and introduce asset auditing mechanisms.
The era of fully exposed hot wallets has thus come to an end.
IV. Ronin (2022): A Fatal Blow to the GameFi Financial System
Ronin is the core cross-chain network of the Axie Infinity ecosystem, carrying the entire GameFi economic system.
Attackers bypassed the cross-chain verification mechanism and directly transferred assets by controlling a majority of signature permissions on validator nodes. This resulted in a loss of approximately $625 million for the project.
The essence of this incident is not complex, but it exposed an extremely dangerous problem. Decentralization is vulnerable when verification power is concentrated in a few nodes.
Following Ronin, cross-chain bridges were officially included in the list of high-risk infrastructure.
V. Poly Network (2021): The Most Dramatic Return-Type Hack
The Poly Network incident is one of the most dramatic attacks in crypto history.
Attackers successfully transferred approximately $610 million in assets by exploiting a vulnerability in the cross-chain contract logic. However, after the incident, the hackers did not immediately cash out but instead publicly communicated the vulnerability issue on the chain and gradually returned the funds.
This behavior plunged the entire industry into a complex emotion: was it an attack or a security test?
Regardless of the motive, this incident revealed a fact: the complexity of cross-chain systems has exceeded the security verification capabilities of human intuition.
VI. BNB Chain (2022): An Emergency Suspension of the Chain-Level System
BNB Chain suffered a cross-chain bridge vulnerability attack in 2022, resulting in a loss of approximately $570 million.
The attackers exploited the verification mechanism vulnerability to mint assets in bulk and quickly transfer them. However, what truly sparked industry discussion was not the attack itself, but BNB Chain's response—a chain-level suspension.
This was the first time the crypto world publicly acknowledged that, in extreme situations, decentralized systems must introduce centralized stop-loss mechanisms.
This marked the industry's entry into a more realistic phase.
VII. FTX (2022): A System Collapse More Deadly Than a Hacker
The FTX incident was not a traditional hacking attack, but its impact far exceeded that of any single attack.
During the platform collapse, a large amount of user assets flowed out abnormally, the system completely lost control, ultimately causing losses exceeding $500 million and triggering a global trust crisis.
FTX's core problem wasn't technical, but structural, such as commingling of funds, unseen risks, and internal control failures.
This made the industry realize for the first time that the biggest risk might not be external attacks, but rather the system itself.
VIII. Wormhole (2022): A Structural Vulnerability in Cross-Chain Bridges
The Wormhole attack resulted in approximately $320 million in losses. The attack exploited a signature verification vulnerability to forge cross-chain messages, thereby minting assets.
The entire process wasn't cracked; it only exploited rule vulnerabilities.
This type of incident labeled cross-chain bridges as having the most easily underestimated attack surface in complex systems.
IX. KuCoin (2020): The Last Lesson of the Hot Wallet Era
The KuCoin exchange suffered an attack in 2020, with approximately $280 million in assets transferred out through the leakage of hot wallet private keys.
Although some assets were recovered, the incident spurred the development of on-chain tracking systems; for example, Chainalysis became a fundamental industry tool.
Since then, the inability to trace stolen assets has gradually become a thing of the past.
10. Kelp DAO + Drift Protocol (2025): The Era of Systemic Attacks
This round of events occurred at the DeFi composite protocol level.
Kelp DAO suffered from authorization vulnerabilities in liquidity staking and cross-protocol calls, leading to the reuse of assets. Drift Protocol, on the other hand, experienced oracle delays and liquidation mechanism amplification risks under extreme market conditions, resulting in a chain reaction of losses.
Both projects suffered losses exceeding $280 million each.
This type of event marks the arrival of a new phase, where the target is no longer a single protocol, but the interconnected structure of multiple protocols. This also signifies that DeFi protocols have entered an era of systemic attacks.
Conclusion: Hackers are actually invisible architects
Abstracting these events leads to a harsh but realistic conclusion: the security system of the crypto industry was not designed, but rather forced out by hacker attacks.
Every large-scale theft pushes the industry to add a new layer of protection. However, at the same time, new complexities create new attack methods.
But as blockchain technology systems become increasingly complex, does the original simple trust model of cryptography still exist?

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The CLARITY Act is a legislative proposal targeting cryptocurrencies and digital assets, aiming to clarify the regulatory status of digital assets within the US legal framework. Key aspects of the bill include defining the ownership of different types of digital assets and clarifying the regulatory scope of regulators such as the SEC, CFTC, and FinCEN. The bill also sets compliance requirements for crypto exchanges, wallet service providers, and fund managers, including registration, reporting, and anti-money laundering (AML) obligations, and establishes a regulatory sandbox for innovative projects to encourage legitimate innovation.

Currently, opinions on the bill differ. Crypto exchange Coinbase supports clearer regulations, believing it helps reduce regulatory uncertainty and protect user funds. Grayscale, however, believes attention should be paid to the impact of the provisions on existing trust and ETF products to prevent stifling innovation. Regarding regulators, SEC Chairman Gary Gensler emphasizes the need for clear legal grounds to regulate market risks, while the CFTC focuses on the compliance of derivatives and exchange activities. Meanwhile, investors and analysts point out that clearer regulatory boundaries may boost institutional investor confidence, but the final enforcement of the provisions remains to be seen.

The “CLARITY Act” entered a critical negotiation period this week, drawing significant attention from the industry. In the short term, clarifying regulatory boundaries can alleviate some compliance anxieties and boost institutional investor confidence; in the medium term, it may prompt projects to accelerate their compliance and innovation efforts, driving the launch of more compliant products; in the long term, if the bill is successfully passed and implemented, it will help establish a healthier and more sustainable crypto market ecosystem, while also establishing a standardized first-mover advantage for the United States in global digital asset regulation.

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