Driven by the KelpDAO security incident, on-chain funds have shown a clear shift toward risk avoidance. Some liquidity was quickly withdrawn from Aave, causing its TVL to fall to $21.9666 billion, a sharp drop of 16.78% from $26.3966 billion the previous day.

In terms of fund behavior, this is not simply emotional volatility, but a typical risk transmission effect—when a protocol faces a security concern, the market quickly re-prices similar DeFi assets, prioritizing the withdrawal of highly correlated exposures.

The rapid contraction of TVL, in essence, reflects a “trust discount,” rather than short-term price fluctuations. Changes in where liquidity flows often reveal the market’s true stance earlier than prices do.

Next, there are two key points to focus on: first, whether the risk from the incident itself has been effectively isolated; second, whether there are signs of funds flowing back.

In the DeFi ecosystem, security is always the underlying logic behind pricing.

Follow me to continuously track on-chain fund flows and the paths of risk spread.