Aave and Lido Lose $1.7 Billion in Value After Binance Attack

The decentralized finance ecosystem saw a $1.7 billion reduction in total value locked following the attack on Binance. The lending platform Aave recorded a $1 billion drop while the Lido protocol lost $713 million during the same period. The incident occurred against a backdrop of prior contraction in stablecoin supply.

The attack on Binance impacted assets valued at $6.34 billion on October 29. An address linked to the attacker used the Aave protocol to supply 60 million USDT and borrow approximately $44.6 million in Wrapped Ethereum. This movement forced a temporary suspension of reserves on the network to protect the system.

Aave guardians froze 175 reserves on version V3 and 117 on V4. Although withdrawals and liquidations remained active, new deposits were halted. High reserve utilization drove up borrowing costs before rates normalized on November 1.