- Ink, the Kraken-incubated OP Stack L2, has seen its total locked value drop by about 33% over the past week.
- The decline can be traced back to the April 18 KelpDAO rsETH exploit, which left approximately $195 million in bad debt on the credit markets.
- Ink’s concentrated rsETH exposure through the Tydro loan markets accelerated the outflow.
According to the DefiLlama chain rankings, Ink has registered an overall decline in value of around 33% over the past week and from 34% to 35% over the past month.
The drop has attracted attention not because Ink itself was directly hacked, but because the credit infrastructure involved concentrated exposure to rsETH.
rsETH is a liquid redraw token at the center of the April 18 KelpDAO exploit. The fallout from that incident spread across multiple chains, and Ink was one of the hardest hit chains due to the structure of the DeFi ecosystem.
How the KelpDAO exploit affected the ink
On April 18, KelpDAO’s LayerZero-based bridge for its rsETH liquid-restaking token was exploited via a compromised single-verifier DVN configuration.
The attacker used this vulnerability to store 116,500 unbacked rsETH tokens worth approximately $292 million to $293 million on Ethereum.
These unsecured tokens were then used as collateral in the credit markets, most notably Aave, and then packed up $ETH and approximately $195 million in bad debt remains.
In the hours that followed, emergency breaks and risk controls were activated in multiple protocols and chains.
Ink was grouped alongside Mantle, Plasma and Hyperliquid L1 as one of the chains most exposed to the fallout. Reporting on the incident explicitly noted that the TVL drops on these networks were caused by active withdrawals rather than symbolic price drops.
The exposure of ink through Tydro made the drawdown sharper
Ink is a Kraken-incubated OP Stack Layer 2 that had grown its TVL from single-digit millions to nearly $450 million by early 2026.
Much of that growth was driven by credit and redraw flows concentrated in Tydro, an Aave v3 white-label implementation that serves as one of Ink’s core DeFi primitives.
At the time of the exploit, approximately $21 million worth of rsETH was collateralized on Ink, compared to approximately $19.36 million in wrapped packs. $ETH debt.
That position was concentrated in just two highly leveraged portfolios, making the exposure particularly sensitive to any uncertainty surrounding rETH’s support.
Once the exploit became apparent, Tydro froze his rSETH markets for ink and began coordinating with the Ink Foundation on a recovery plan.
Aave’s incident report shared scenarios in which Tydro’s Ink implementation could experience between approximately $0.9 million and nearly $10 million in bad debt.
Why Ink’s TVL base was particularly vulnerable to a risk event
Ink’s position in the chain rankings means the TVL decline is more severe than would have been possible for a larger, more established network.
As a newer and smaller chain compared to others like Arbitrum or Base, much of Ink’s TVL was tied to a limited number of DeFi primitives, primarily Tydro, which reprized products and liquidity farming activities around the expected INK token.
A significant portion of Ink’s capital was short-lived and incentive-driven before the exploit took place. This type of liquidity is the first to disappear in a risky environment.
Both Tydro and wider ecosystem reporting confirm that no fraudulent transactions have taken place on Ink itself. The exploit took place on KelpDAO’s cross-chain bridge and rsETH coin route.
Ink absorbed the fallout through contaminated collateral rather than a direct attack on its own infrastructure.