Sometimes you just have to trust your gut
Good morning/evening
It has been a dire time for DeFi in the last few weeks, if you have read any of my articles you will know that I did quite well in the past from using DeFi. Even being someone that is pro DeFi let’s be real for a second, DeFi protocols have already been hit for over $750M in hacks and exploits in 2026, and we’re not even four months in. What’s worse is that just two attacks make up more than $577M of that. Kelp dao got wrecked on April 19, their layer zero bridge drained for $292M in rsETH, then right before that on April 1, drift protocol lost $285M. Then there are some other hacks and exploits that have been smaller in size but still annoying and frustrating for those who lose or have funds locked.
Two of the top three DeFi exploits in 2026 came from bridges, and nothing about the failure modes has really changed, it’s not new bugs, it’s the same weak spots, cross chain message verification and human key management, just getting exploited at a larger scale as more value flows through bridges.The Kelp DAO exploit made that pretty clear, it didn’t just hit one protocol, it froze rsETH markets across 20 chains and even left Aave holding bad debt. Bridge risk doesn’t stay contained, it spreads anywhere that accepts bridged collateral, so even if you’re not using bridges directly, (which I also don't like doing) you’re still exposed if your protocol does and here is me worrying about smart contract risk! I have also always been wary of the whole Liquid staking thing, don't get me wrong, I see the benefits but I also see how fragile it can be. When I say Bitcoin is easy, to me it is a simple, easy strategy that has worked in the past and there is nothing wrong in keeping it simple!
Back on the 9th April I was reading an article by BrandyCrypto (he has written some great articles) and I commented on one of his DeFi articles
'What do you think about Chaos labs leaving Aave? I was a bit concerned.'
I had read all about Chaos and it bothered me a bit, nothing specific, just a nagging gut feeling, so I said to my husband that morning that I was moving all our funds off of Aave for now. Now this does not happen very often but I think he was a bit annoyed with me as we had quite a chunk of our funds on there, earning a little whilst we wait to cash some out and re deploy some. I honestly think he thought I was overreacting as I had no concrete reason and was just being a bit twitchy. I also remember reading an article way back ( Sorry I can't remember who it was, maybe an OG of Pub0x) who said they had taken all their funds off of FTX just a few days before it all fell apart, not for any real reason, just a gut feeling. I had the same gut feeling, and although Aave was not hacked itself, I am glad the bulk of our funds are not on there, as half was on Arbitrum and although I still have a smaller play on ARB on Aave it is not enough to worry about. (The ETH on that is locked for now, but the positions are still reasonable)
So the DeFi advocate got twitchy, sometimes you have just got to trust your gut instinct. It also goes to show just how volatile and risky this space can still be, often due to no fault of our own. I do not doubt that Aave will be fine and I will put funds back on there when I feel ready, but for now I am glad all is back on the Ledger, it looks like I am not the only one as deposits on Aave dropped by $10 billion, around 22% of its total deposits before the Kelp DAO exploit. Morpho and Sky, the next two biggest DeFi lenders, saw their deposits decline by $1.7 billion and $600 million respectively. Kamino on Solana, another DeFi protocol I use, experienced some $280 million of outflows since April 18, so I am not the only one who got a bit twitchy! Last year was the worst on record for cryptocurrency hacks, with total losses of $3.4 billion according to Chainalysis. The fact that losses this year have already passed $771 million doesn’t bode well. ( I have/had some funds on Drift too, but that is a different article) All this goes to show that DeFi isn’t just about yield, it’s also about managing invisible risks you don’t control.
What are your thoughts? Are you still in any DeFi protocols? As always thanks for reading and please feel free to comment.
