TechFlow News: On May 9, Aave officially announced the second-phase progress of its rsETH incident recovery technical plan. Substantial progress has been made on the preliminary plan published on April 28.
Completed milestones: On May 6, eight identified positions compromised on Aave V3 Ethereum Core and Arbitrum were fully liquidated. The recovered rsETH collateral has been transferred to the Recovery Guardians per the Aave DAO-governed AIP. All other users and Umbrella stakers remain unaffected. Meanwhile, both Mantle DAO and Arbitrum DAO have approved relevant governance proposals—Arbitrum DAO’s proposal aims to return the $71 million ETH recovered by the Security Council from the attacker to Aave protocol users. This proposal has met quorum requirements and passed overwhelmingly.
Legally, on May 1, a court order issued against North Korean judgment holders sought to freeze the aforementioned $71 million ETH held by Arbitrum DAO. Aave LLC promptly filed an emergency motion; following a hearing on May 6, the court accepted Aave LLC’s proposed solution, authorizing the on-chain Arbitrum DAO vote to transfer the frozen ETH to Aave LLC—with the court order attached to Aave LLC upon transfer. During the court’s review period, Aave will separately borrow funds as emergency backup to cover any liquidity shortfall.
Next steps: rsETH proceeds from the Arbitrum liquidations will be burned; Kelp will concurrently revoke the corresponding LayerZero cross-chain message packets on Ethereum to neutralize the rsETH oversupply caused by the vulnerability. rsETH seized on Ethereum will be deposited into the bridge vault, and combined with ETH raised by the DeFi United coalition, will restore funding support for the vault contract. Once completed, bridging operations will resume normal functionality and rsETH withdrawals will reopen. Additionally, the Loan-to-Value (LTV) ratio for WETH on Aave V3 Ethereum Core will be restored to its normal level.
