After a $230 million breach, Aave re-enables ether borrowing limits.

Aave has restored wrapped ether (WETH) borrowing parameters across major networks, unwinding emergency restrictions imposed after April’s exploit as systemic risks recede.

The DeFi lending protocol reinstated loan-to-value (LTV) ratios on six chains following an attack linked to Kelp DAO’s rsETH token. The exploit saw roughly $292 million in unbacked tokens minted and used as collateral to extract about $230 million in ether from Aave.

WETH plays a central role in decentralized finance as a primary collateral asset used for borrowing, leverage, and liquidity provisioning. At the height of the incident, Aave cut WETH’s LTV to 0%, effectively disabling its use as collateral to prevent further contagion.

With market conditions stabilizing, LTV ratios have now been returned to pre-exploit levels, including 80.5% on Ethereum Core, 84% on Ethereum Prime, 80% across Arbitrum, Base, and Linea, and 80.5% on Mantle.

The attack resulted in the creation of approximately 112,103 unbacked rsETH. Recovery efforts have since reclaimed around 106,993 tokens through liquidations and coordinated interventions — including 89,567 via Aave and 17,426 via Compound. A remaining shortfall of roughly 5,200 rsETH is expected to be covered by the DeFi United coalition.

The reinstatement of WETH borrowing capacity signals a return to normal market functioning. As a foundational collateral asset, its temporary removal constrained leverage, reduced capital efficiency, and disrupted liquidity across DeFi ecosystems.

By restoring these parameters, Aave is indicating that immediate contagion risks have been largely contained. However, lingering legal uncertainties around frozen assets and the allocation of losses continue to hang over the aftermath of the exploit.