Aave restores WETH borrowing after Kelp DAO exploit

Aave has reinstated the loan‑to‑value ratios for wrapped Ether (WETH) on six major blockchain networks—Ethereum Core, Ethereum Prime, Arbitrum, Base, Mantle and Linea—bringing collateral rates back to pre‑attack levels of roughly 80‑84%. The move follows the April 18 bridge attack on Kelp DAO’s rsETH token, which created unbacked tokens that were used as collateral to withdraw about $230 million in ETH from Aave, generating roughly $195 million in bad debt and prompting emergency safeguards that set WETH collateral to zero.

Governance participants approved a proposal to remove the WETH freeze after recovery progress, and the protocol has begun restoring normal borrowing conditions. Recovery efforts continue: Kelp DAO plans to discontinue rsETH bridging on several networks after June 15 and will charge a $100 USDC fee per address for fund recovery. Legal disputes over 30,765 ETH (about $71 million) frozen in an Arbitrum wallet remain unresolved, with claims linking the assets to North Korean hacking groups. Aave’s total value locked fell from $23.5 billion in March to about $14.8 billion after the incident.