The recent KelpDAO hack has sent shockwaves through the decentralized finance (DeFi) ecosystem, triggering a massive unwind of leveraged positions and a flight to stablecoins. According to data tracked by defillama.com, the stablecoin market experienced a net outflow of approximately $892 million over the seven days ending April 26, 2026, though total market capitalization remained resilient at $320.65 billion. The event exposed stark divergences among stablecoin issuers, with Tether's USDT strengthening its grip while newer entrants like Ethena's USDe suffered severe redemptions.
How KelpDAO Unraveling Sparked a Stablecoin Exodus
The KelpDAO breach triggered a sharp decline in DeFi total value locked (TVL), evaporating billions of dollars within days. The contagion quickly spread to major borrowing protocols such as Aave, forcing liquidations and prompting users to exit positions via stablecoins. This scramble for liquidity manifested as a weekly net drain of $892.8 million from the stablecoin market, as recorded by on-chain analytics.
Divergent Fortunes: USDT Rises, USDC and USDS Dip
In the midst of the turmoil, capital gravitated towards the perceived safe haven: Tether's USDT. Its market cap swelled to $189.78 billion, commanding a 59.19% share of the stablecoin market, with a weekly gain of 1.55% (approximately $2.89 billion). Circle's USDC, the second-largest, stood at $77.79 billion but declined 1.01% week-over-week, losing about $794 million. Sky's USDS (formerly Dai from MakerDAO) fell 1.89% to $8.27 billion, while legacy DAI bucked the trend with a 1.55% rise to $4.67 billion. World Liberty Financial's USD1 surged 4.34% to $4.39 billion, the best performer among top five.
USDe, PYUSD Lead Losses as Weak Structures Crumble
The biggest casualty was Ethena's USDe, which saw its market capitalization plummet 34.39% to $3.82 billion, with over $2 billion in outflows during the week. PayPal's PYUSD also contracted sharply by 16.06% to $3.445 billion, while USDG fell 5.71% to $1.114 billion. FDUSD declined 1.46% to $2.34 billion. Other stablecoins like FRAX and GUSD also experienced weekly losses.
Market Outlook: Recovery Hinges on Trust Rebuilding
The data suggests the stablecoin market is still reeling from the KelpDAO shock. Capital is not fleeing indiscriminately but is concentrating into the most liquid and established issuers, while structurally weaker tokens face disproportionate contractions. Whether stability returns in the coming weeks will depend less on price movements and more on the restoration of confidence across DeFi's core mechanisms. Investors should closely monitor any cascade effects and potential regulatory responses.