Aave Restores WETH Borrowing Across Six Networks

• Aave reinstated WETH borrowing with pre-exploit loan-to-value ratios across Ethereum and L2 networks.
• The protocol had paused and reduced collateral settings after a $230M ETH loss linked to rsETH abuse.
• Recovery efforts continue, though Aave’s total value locked remains significantly lower post-exploit.

Aave has restored wrapped Ether borrowing functions across six blockchain networks after emergency restrictions followed the April rsETH exploit. According to Aave and founder Stani Kulechov, WETH loan-to-value ratios returned to pre-incident levels on Ethereum Core, Ethereum Prime, Arbitrum, Base, Mantle, and Linea as the protocol continued its recovery plan tied to the Kelp DAO incident.

WETH Limits Return Across Major Networks

According to Aave, WETH now operates normally again across all affected V3 deployments. Users can once again borrow against wrapped Ether positions, including through collateral and debt swaps.

The protocol had temporarily reduced WETH loan-to-value ratios to 0% after the April exploit. Attackers reportedly minted nearly $292 million in unbacked rsETH tokens and used them as collateral on Aave.

That exploit drained roughly $230 million in ETH from the lending protocol. Consequently, Aave froze rsETH and wrsETH reserves while limiting WETH borrowing activity.

Now, however, governance-approved changes have restored previous collateral settings. Ethereum Core returned to an 80.5% LTV, while Ethereum Prime resumed at 84%.

Meanwhile, Arbitrum, Base, and Linea returned to 80% LTV ratios. Mantle resumed at 80.5%, according to governance documents.

Recovery Efforts Continue After Exploit

According to recovery updates, around 112,103 unbacked rsETH emerged during the exploit. However, coordinated liquidation efforts recovered most of those assets.

Aave liquidations recovered about 89,567 rsETH, while Compound recovered another 17,426 tokens. That left roughly 5,200 rsETH still unresolved.

The remaining shortfall is expected to be covered by DeFi United, an industry coalition involved in recovery efforts. Meanwhile, KelpDAO continued broader recovery actions tied to the incident.

The protocol also restored rsETH backing and reopened withdrawals using recovered Ether and donated tokens. Additionally, Kelp DAO migrated rsETH to the Chainlink oracle platform after previously relying on LayerZero infrastructure.

TVL Drops as Kelp DAO Cuts Networks

Although borrowing functions resumed, Aave’s total value locked remains lower after the exploit. DefiLlama data showed TVL dropped from $23.5 billion in March to roughly $14.8 billion this week.

Meanwhile, Kelp DAO announced plans to sunset rsETH bridging across several networks after June 15. Those networks include Optimism, HyperEVM, Unichain, Avalanche, and MegaETH.

Entropy Advisors data head Tom Wan also noted declining wrapped stETH and wrapped Ether deposits since the exploit. However, Ether borrowing rates fell to about 1.9%, while unused ETH liquidity increased across the protocol.

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