How do exploits like KelpDAO affect overall DeFi liquidity and user trust?
➤ The KelpDAO exploit resulted in a $13 billion DeFi liquidity drain and severely damaged user trust by exposing hidden centralization in supposedly decentralized systems. ➤ Exploits trigger capital flight, reduce DEX liquidity, and increase slippage, making the ecosystem inhospitable for institutional capital and leading to regulatory scrutiny. ➤ While exploits are devastating, collaborative recovery efforts and a shift towards intent-alignment monitoring are helping to rebuild trust and strengthen the DeFi ecosystem.















