- Ink, an OP Stack L2 incubated on Kraken, saw its total value drop by roughly 33% over the past week.
- This decline is due to the KelpDAO rsETH exploit on April 18, which left approximately $195 million in bad debt across lending markets.
- Ink’s concentrated exposure to rsETH through Tydro lending markets has accelerated outflows.
The ink recorded an overall decrease in value of approximately 33% over the past week and from 34% to 35% over the past month, according to Devillama Series ratings.
This decline attracted attention not because Ink itself was directly hacked, but because its lending infrastructure was extensively exposed. rsETH.
rsETH is a liquid recovery token on the KelpDAO exploit center on April 18. The fallout from that incident spread across multiple chains and Ink was among the hardest hit due to the structure of its DeFi ecosystem.
How KelpDAO Exploits Affected Ink
On April 18, the LayerZero-based KelpDAO bridge for the rsETH liquid recovery token was exploited through a compromised single-validation DVN configuration.
The attacker used this vulnerability to mint 116,500 unbacked rsETH tokens worth approximately $292 million to $293 million on Ethereum.
These unbacked tokens were then used as collateral across lending marketplaces, most notably Aave, depleting the encapsulated ETH and leaving approximately $195 million in bad debt.
Emergency pauses and risk controls were activated across multiple protocols and chains in the following hours.
Ink is grouped alongside Mantle, Plasma, and Hyperliquid L1 as one of the chains most exposed to the fallout. Coverage of the incident clearly indicated that TVL declines on these networks were driven by active withdrawals rather than falling token prices.
Exposure of the ink through the Tydro made the drawing process more noticeable
Ink is an OP Stack Layer 2 incubated by Kraken that has grown its TVL from single-digit millions to nearly $450 million by early 2026.
Much of this growth was driven by concentrated lending and repayment flows at Tydro, a white-label Aave v3 deployment that serves as one of Ink’s core DeFi cores.
At the time of the exploit, approximately $21 million of rsETH was posted on Ink as collateral against approximately $19.36 million of wrapped ETH debt.
This position was concentrated in only two highly leveraged portfolios, making exposure particularly sensitive to any uncertainty around rsETH support.
Once the exploit became apparent, Tydro froze its rsETH markets on Ink and began coordinating with the Ink Foundation on a remediation plan.
The Aave incident report shared scenarios in which Tydro’s Ink deployment could face between approximately $0.9 million and approximately $10 million in bad debt.
Why was Ink’s TVL base particularly vulnerable to a risk avoidance event?
Ink’s position in the series ratings makes TVL’s decline more serious than it would be for a larger, more established network.
As a newer and smaller chain compared to other chains like Arbitrum or Base, a significant portion of Ink’s TVL has been tied to a narrow set of DeFi fundamentals, primarily Tydro, restaking products, and liquidity farming activity around the expected INK token.
A significant share of Ink’s capital was short-term and incentive-driven before the exploit occurred. This type of liquidity is the first to exit during a risk-off environment.
Both Tydro and broader ecosystem reports confirm that no fraudulent transactions occurred on Ink itself. The exploit occurred on the cross-chain KelpDAO bridge and the rsETH coinage path.
Ink absorbed the consequences through tainted collateral rather than a direct attack on its infrastructure.
