Crypto lending rises again… but have they solved the risks?

As the charts flip from red to green, crypto lending has seen a resurgence of interest after a particularly dismal second quarter.Figures from Galaxy show that $11.33 billion left the sector in Q2 — partly due to the crisis of confidence in lenders caused by the Kelp DAO hack in April that left users of the most trusted protocol, Aave, unable to access their ETH.Since the beginning of July, however, total lending value locked has gained more than 55% to sit around $56 billion today.But that also means the honeypot has grown larger. Can users trust interlinked DeFi lending protocols in the age of AI-assisted hacks, when an exploit from any one protocol can have a series of devastating effects for other protocols connected to it?Stani Kulechov, founder and chief executive of Aave Labs, tells Magazine the problem is now top of mind. “When a protocol accepts a token as collateral, it is also accepting that token’s bridge, its verifier configuration, its oracle and its issuer’s operational security.”And that’s exactly what landed Aave in trouble.An expanding attack surfaceWhen hackers exploited a Kelp DAO cross-chain route in April, they created 116,500 unbacked rsETH (worth about $290 ...