Aave

Aave ($AAVE) is a decentralized money market that runs on the Ethereum blockchain. It’s most notable for its loan system, which allows users to earn interest on deposits and borrow assets with an interest rate. The interest rate is determined algorithmically. Originally named ETHLend in 2017, it was renamed to Aave in 2018. With the rebrand, it also updated its money market function: previously with ETHLend, borrowers and lenders were individually matched. Aave utilizes a liquidity pool system, where crypto loan assets are pooled together. Users must post collateral before borrowing but can only borrow up the value of said collateral. One benefit of Aave is that a user can gain exposure to different cryptos without having to actually own all of them.

A federal case over frozen crypto could determine whether DeFi recovery funds can be seized to satisfy unrelated judgments.

Aave Fights to Unfreeze $71 Million as Kelp DAO Hack Spills Into Court

Ethereum

Aave LLC filed an emergency motion in federal court seeking to lift an order that froze ether tied to last month's Kelp DAO exploit.

Aave fights court-ordered $73 million ETH freeze, argues ‘a thief does not own what he steals'

Major DeFi protocols outlined technical steps to eliminate bad debt and restore full backing for exploited rsETH tokens.

Aave, Compound Unveil Technical Plan to Address Fallout From $290M Kelp DAO Hack

DeFi United, a coalition of multiple blockchain projects and crypto ecosystem individuals, has laid out a detailed plan to restore the backing of rsETH after this month's Kelp DAO hack sent shockwaves through lending markets.

A crypto coalition releases technical proposal to save Aave users from a massive token exploit

Aave founder Stani Kulechov published a technical implementation plan on Tuesday to restore rsETH backing across affected protocols, with execution sequences set to begin within days. Key Takeaways: The recovery runs two parallel tracks, i.e., restoring rsETH's nominal 1.07 ETH backing ratio through tranched ETH deposits, and clearing eight Aave positions.

Aave Releases Technical Plan to Restore rsETH Backing as Defi United's Coalition Expands

The response to the DeFi recovery fund has quickly extended beyond Aave, and in some cases began with direct outreach.

Industry leaders are pouring hundreds of millions into a rescue plan for Aave users after massive crypto hack

The Aave-led relief effort has gained widespread support, securing enough commitments to replenish the swiped funds.

Aave-Led 'DeFi United' Relief Effort Raises $300 Million to Cover Kelp DAO Exploit Losses

Curve DAO Token

The plan allows trapped lenders to sell tokenized claims on deposits, offering buyers an option-like bet on CRV's recovery.

Curve founder pitches market-based fix for $700K bad debt in contrast to Aave bailout

Babylon Foundation is committing $3 million to Aave in a bid to support DeFi markets following recent instability. The move signals growing alignment between bitcoin-focused projects and broader decentralized finance ecosystems. Key Takeaways: Babylon Foundation deploys $3 million USDT to Aave V3 ($2 million) and V4 ($1 million) after rsETH shock.

Babylon Backs Aave With $3 Million DeFi Commitment

A coordinated decentralized finance ( DeFi) relief effort has reportedly raised $160 million to cover bad debt created when attackers exploited KelpDAO's bridge and deposited unbacked collateral into Aave V3 markets on April 18, 2026. Key Takeaways: Aave froze rsETH reserves within hours of the April 18 Kelp DAO exploit, which created up to $230.

DeFi United Secures $160M as Industry Moves to Cover Aave Bad Debt Crisis

Blockchain analytics platform Arkham said that the largest contributors are Mantle and Aave DAO, having raised a combined $127 million.

Aave raises nearly 80% of the $200 million it needs to cover bad debt left by Kelp DAO exploit

Arbitrum

LayerZero 

The standard Constitutional AIP lifecycle runs roughly 49 days from forum publication to onchain execution, a timeline some delegates say is too long.

Aave, Kelp, LayerZero ask Arbitrum DAO to release $71 million in frozen ETH to rsETH recovery effort

Protocols and individual DeFi users have collectively pledged enough to cover the Kelp DAO exploit losses.

Aave proposes 25,000 ETH contribution to DeFi United to plug Kelp DAO exploit hole

Aave founder Stani Kulechov committed 5,000 ether to DeFi United, the ecosystem-wide recovery initiative launched post the $292 million KelpDAO exploit, with Mantle Network following with a 30,000 ETH backstop. Key Takeaways: Aave founder Stani Kulechov personally pledged 5,000 ETH to DeFi United. Mantle Network committed 30,000 ETH, pushing total recovery pledges past 43,500 ETH.

Aave Founder Stani Kulechov Pledges 5,000 ETH to DeFi United as Mantle Network Adds 30,000 ETH Backstop

Aave's founder has pledged 5,000 ETH of his own money as a growing DeFi coalition races to contain the fallout from the KelpDAO exploit.

Aave Leads ‘DeFi United' Push to Contain $292M KelpDAO Fallout

The Mantle team wrote that the loan would generate yield and strengthen the relationship between Mantle and Aave.

Mantle proposes up to 30,000 ETH loan to address Aave bad debt from Kelp exploit

Industry players are coordinating a recovery effort as the year's biggest crypto rattled Aave, with Lido and EtherFi being firsts to offer aid.

Aave rallies DeFi partners to contain fallout from $292 million KelpDAO hack

USDC

Some users pushed back via Aave's governance forum, fearing the changes would fuel liquidations on the lending protocol.

Circle Economist Proposes 50% Rate Ceiling to Snap Aave's USDC Liquidity Crisis

Gordon Liao, Circle's Chief Economist, submitted a governance proposal on April 22, 2026, calling on Aave to raise USDC borrow rates sharply on its V3 Ethereum Core market after a $292 million exploit against KelpDAO left the pool functionally frozen for four consecutive days.

Circle Economist Proposes Higher USDC Rates on Aave V3 After KelpDAO Exploit

Circle Chief Economist Gordon Liao proposed raising USDC borrowing rates on Aave to ease post-KelpDAO liquidity strains.

Circle chief economist floats higher USDC rates on Aave amid KelpDAO fallout

Funds leaving Aave are splitting across safer lending, simpler ETH exposure and off-chain yield, with stablecoins acting as a temporary refuge.

Flight to safety: How Maker's Spark and USDC are winning the $10 billion Aave breakup

CertiK says the lending protocol is in serious trouble while CEO Stani Kulechov tells CoinDesk he does “not have anything useful to say.”

Aave's core markets hit 100% utilization at once, and that's not a good thing

A wallet linked to Justin Sun by onchain analysts withdrew 274 million USDT from Aave just 21 minutes after the protocol froze its rsETH markets on April 18, following the KelpDAO exploit. Key Takeaways: A wallet linked to Justin Sun pulled 274 million USDT from Aave 21 minutes after the rsETH market was frozen.

Onchain Analysts Flag Justin Sun-Linked Wallet's 274 Million USDT Exit From Aave Minutes After rsETH Freeze

Kelp DAO has countered LayerZero's earlier statement, saying the 1-of-1 DVN setup under criticism was shipped as the default at LayerZero.

Kelp DAO shifts blame to LayerZero for $292 million exploit; Aave examines bad debt scenarios

An incident report published by Llamarisk to the Aave forum explains that a bridge exploit targeting KelpDAO's Layerzero V2 rsETH route on Saturday allowed an attacker to extract 116,500 rsETH from Ethereum's OFT adapter without burning any tokens on the source chain.

News for Aave Crypto (AAVE)