Kelp rsETH bridge exploit triggers Aave V3 reserve freezes

What happened

Aave's official governance record states that an exploit affecting Kelp's LayerZero rsETH bridge route introduced unbacked rsETH into Aave V3 markets across multiple chains.

What changed

The Aave Protocol Guardian and Risk Steward froze rsETH and wrsETH reserves and adjusted WETH interest rates across affected deployments. AAVE buybacks stopped on April 19 to preserve balance-sheet flexibility while losses and recovery remained unresolved.

What did not change

The record does not establish final loss allocation, recovered backing, realized bad debt, or complete resumption of affected reserves. The buyback ARFC does not itself resolve the incident.

Confirmed

• The official record dates the underlying bridge incident to April 18, 2026.
• Aave's Guardian and Risk Steward executed freezes on rsETH and wrsETH reserves across affected deployments.
• WETH reserve interest rates were adjusted as part of the defensive response.
• No AAVE buyback transactions were executed after April 19 according to the proposal.
• The proposal says potential loss allocation, recovery, and DAO-level responses remained unsettled.

Still open

• The amount of unbacked rsETH that entered each Aave deployment.
• The affected chains, reserve-level exposure, and client exposure requiring reconciliation.
• Whether bad debt materialized and how any loss was allocated.
• The extent and timing of rsETH backing recovery.
• When reserve freezes and defensive interest-rate settings were lifted.
• Whether the proposed buyback policy was approved or later superseded.

What it means for an advisor

• Immediately reconcile approved or client-held Aave positions against rsETH, wrsETH, and affected WETH markets.
• Review the Aave memo's collateral, freeze, bad-debt, and emergency-control analysis using chain-specific executed state.
• Do not generalize the reserve-specific incident to every Aave V3 market, but do not treat affected reserves as available until recovery and configuration are verified.