Aave Restores WETH Borrowing Limits As rsETH Recovery Advances

Aave has restored WETH borrowing conditions across six affected V3 markets, rolling back emergency limits imposed after the April KelpDAO rsETH exploit. The Aave governance proposal restores WETH loan-to-value ratios on Ethereum Core, Ethereum Prime, Arbitrum, Base, Mantle and Linea to their pre-exploit levels, bringing one of DeFi’s largest lending markets closer to normal operation.

The move gives users the ability to borrow against WETH again, including through collateral swaps and debt swaps. Aave founder Stani Kulechov said the restoration marks the next completed step in the rsETH technical recovery plan, after weeks of restricted borrowing and risk controls around affected markets.

The rollback follows a fast but careful recovery process. Aave froze rsETH and wrsETH reserves across multiple V3 deployments after the April 18 exploit and later set WETH LTVs to zero on affected markets to prevent stress from spreading across ETH liquidity. The protocol’s incident report said Aave’s smart contracts were not compromised, with the crisis originating from the underlying rsETH asset and the KelpDAO bridge path rather than from Aave’s own lending logic.

Recovery Progress Gives Aave Room To Lift Restrictions

The restoration became possible after most of the unbacked rsETH tied to the attack was recovered or accounted for. LlamaRisk’s proposal says 106,993 rsETH has been recovered across Aave V3 and Compound, out of an estimated 112,103 rsETH of unbacked supply on the affected Layer 2s. That leaves roughly 5,211 rsETH outside the liquidation recovery process, with the remaining gap expected to be covered by committed ETH from the DeFi United coalition.

That recovery rate changes the risk profile for WETH suppliers and borrowers. When the exploit first hit, the immediate concern was that unbacked rsETH could support bad debt across lending markets while ETH liquidity stayed trapped at high utilization. Restoring WETH LTVs signals that Aave’s risk providers believe the remaining exposure is contained enough to remove the most restrictive emergency settings without weakening user protection.

The target LTVs now return to their pre-exploit values: 80.50% on Ethereum Core, 84% on Ethereum Prime, 80% on Arbitrum, 80% on Base, 80.50% on Mantle and 80% on Linea. In ETH-correlated E-Mode, effective WETH LTVs also return to 93% on Ethereum Core and Arbitrum and 90% on Base, restoring the leverage rails used by many ETH looping and collateral-management strategies.

KelpDAO Fallout Still Shapes DeFi Risk Controls

The April exploit remains one of the most important DeFi stress events of 2026. The attacker drained 116,500 rsETH from KelpDAO’s LayerZero-linked bridge and used the unbacked collateral across lending markets, creating major pressure on Aave, Compound and the wider restaking sector. Earlier DeFi United recovery planning focused on restoring rsETH backing without forcing broad losses onto users, while later court and governance steps dealt with frozen ETH connected to the attacker.

The recovery effort has also left permanent lessons for lending protocols. Liquid staking and restaking tokens can look highly correlated with ETH during normal markets, but bridge failures, oracle treatment, redemption pauses and cross-chain supply mismatches can turn them into system-wide collateral risks. Aave’s decision to restore WETH limits does not erase that lesson. It shows that emergency controls can be lifted only after the backing gap, liquidation path and recovery funding are far clearer.

KelpDAO is also narrowing its cross-chain footprint after the incident. Market reports citing Kelp’s recovery updates say rsETH bridging will be sunset on several lower-usage networks after June 15, part of a broader effort to consolidate support around more secure and liquid environments.

Aave’s latest step puts WETH borrowing back online across the affected markets, but the final recovery record will depend on execution around the remaining rsETH gap, DeFi United funding, any frozen ETH transfers, and KelpDAO’s bridge changes. For users, the practical shift is immediate: WETH borrowing is no longer locked under the harshest emergency settings. For DeFi risk teams, the harder work now moves to preventing the next restaking or bridge-linked collateral shock before it reaches the lending markets again.

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