Aave's risk management service LlamaRisk recommended winding down every reserve on six V3 blockchain markets, affecting approximately $98 million in supplied assets and $15.6 million in debt across 50 low-usage reserves.
Aave published an official postmortem tracing a $230 million exploit to a LayerZero bridge verification failure and announced a sweeping overhaul of its asset-listing standards as DeFi risks shift beyond smart contract bugs.
Aave has progressed to Phase II of recovering exploited rsETH funds following a $200 million bad debt event linked to the Lazarus Group, with $71 million in ETH returns moving forward despite no flaws in Aave's own contracts.
Aave LLC filed an emergency motion in U.S. federal court to lift a restraining order freezing approximately $73 million in Ether recovered after the Kelp DAO exploit, as a law firm attempts to seize the funds claiming links to North Korean hackers.
A coalition of DeFi protocols including Aave, Compound, and others unveiled a detailed technical plan to eliminate bad debt and restore full backing for exploited rsETH tokens following the $290 million Kelp DAO hack, with pledges totaling over $300 million in recovery funds.
Aave governance proposed contributing 25,000 ETH to the DeFi United coalition working to cover losses from the $292 million Kelp DAO exploit. Multiple protocols and individuals have collectively pledged enough to cover the shortfall, with Mantle proposing a 30,000 ETH loan.
Aave's total value locked plunged $8 billion in 24 hours following the Kelp DAO exploit, with risk managers modeling two bad debt scenarios as users withdrew billions. The AAVE token fell nearly 20% to $89.50 amid contagion fears.
A coalition of DeFi protocols deployed a joint emergency mechanism to help Aave ETH lenders and loopers exit positions after the Kelp DAO bridge exploit created systemic risk across lending markets. The response demonstrates DeFi's architectural openness can produce rapid crisis solutions.
Attackers drained approximately 116,500 rsETH (roughly $292-293 million) from Kelp DAO's LayerZero-powered bridge, causing emergency freezes across multiple DeFi protocols including Aave, SparkLend, Fluid, and Upshift. The exploit represents 2026's largest crypto hack to date and impacted at least nine protocols.
Fireblocks introduced 'Earn,' a new platform enabling institutions to generate yield on stablecoins through direct access to Aave and Morpho-based lending protocols, incorporating institutional-grade approval workflows and policy controls.
Chaos Labs, a key risk management provider for Aave, announced its departure from the DeFi protocol following disputes over governance and the upcoming V4 upgrade. The exit follows recent departures of other major contributors including BGD Labs and ACI.
Aave deployed its V4 upgrade on Ethereum mainnet after a governance vote, introducing a hub-and-spoke architecture designed to concentrate liquidity and expand DeFi into real-world credit markets. The upgrade includes Aave Pro for advanced users and integrates Chainlink oracles.
