Binance hack triggers $1.7 billion loss in DeFi protocols

A massive $6.34 billion security breach at Binance has caused significant volatility across the decentralized finance (DeFi) sector. Following the October 29 incident, major protocols including Aave and Lido experienced a combined capital drop of approximately $1.7 billion.

The breach coincided with a broader contraction in the stablecoin market, which saw its total market capitalization decrease by over $10 billion within a 30-day period. In response to the incident, Aave froze 175 V3 reserves and 117 V4 reserves to prevent fresh deposits, though withdrawals and liquidations remained active. This led to some reserves reaching utilization rates between 92% and 100%, driving up borrowing costs.

Despite the market shock, analysts note that Bitcoin has shown unexpected resilience. While a large-scale attack of this magnitude might typically trigger a 20% market correction, Bitcoin experienced only an approximate 5% drop, maintaining critical support levels near its 50-week moving average.