Aave governance is moving to lift precautionary restrictions on WETH across its V3 deployments following substantial progress in recovering assets from the April 2026 Kelp/LayerZero OFT bridge exploit. The protocol will restore loan-to-value parameters to pre-incident levels on Ethereum Core, Ethereum Prime, Arbitrum, Base, Mantle, and Linea, while simultaneously unfreezing WETH on Layer 2 instances where it had remained locked. These coordinated actions signal that the immediate risk period has passed and market operations can return to normal conditions.
The temporary restrictions—including a zero LTV for WETH and complete freeze on certain L2 networks—were justified protective measures implemented during the acute phase of the exploit. However, recovery efforts have demonstrated sufficient progress to justify removing these constraints. Liquidators successfully seized attacker positions across Aave V3 Ethereum Core and Arbitrum in early May, recovering approximately 106,993 rsETH (the affected token) from the combined attack surface. Of the estimated 112,103 rsETH in unbacked supply, Aave V3 alone recovered 89,567 units through targeted liquidation payloads. The remaining shortfall of roughly 5,211 rsETH—tokens sold by the attacker on decentralized exchanges—is covered by DeFi United's coalition commitments, which now include Mantle DAO following a formal governance vote.
Beyond token recovery, the legal and institutional dimensions of the incident have largely resolved. An authorized New York court approved an Arbitrum DAO vote to unlock $71 million in stolen ETH that Arbitrum's Security Council had immobilized, directing these funds toward Aave LLC for the broader recovery initiative. This multi-layered approach—combining on-chain liquidations, cross-protocol coordination with Compound, and institutional fund recovery—has substantially mitigated the systemic risk that initially prompted the conservative response. The decision to restore WETH parameters now reflects confidence that user protections remain intact despite removing temporary friction.
The distinction matters for end-users and yield strategies relying on WETH collateral. A zero LTV effectively prevents borrowing against WETH holdings, regardless of market conditions, creating unnecessary inefficiency once acute risks subside. By calibrating restrictions to match the actual recovery status rather than the initial threat level, Aave demonstrates responsive governance that balances caution with usability. As DeFi protocols continue managing exploits of increasing sophistication, this measured normalization process may serve as a template for other recovery scenarios.