Aave: Launches rsETH Incident Compensation Tool, Focusing on Resolving rsETH Minting Issue and Restoring Market Functionality

BlockBeats News, May 9th - Aave has released the Phase Two announcement of the rsETH incident recovery plan. On April 28th, Aave announced the V3 technical recovery solution for the rsETH hack incident, which has made significant progress on both Ethereum Core and Arbitrum. On May 6th, 8 Aave V3 positions belonging to the attacker were successfully liquidated, and the recovered rsETH collateral was transferred to the Recovery Guardian as per AIP. Other users, including Umbrella stakers, were unaffected. Additionally, governance proposals from Mantle DAO and Arbitrum DAO have been approved. The latter agreed to return the recovered $71 million ETH to Aave for the DeFi United joint recovery effort. Positive legal developments have also occurred: a court order has allowed the Arbitrum DAO to transfer the frozen ETH to Aave LLC via on-chain voting, with the restraining order to follow the transfer. Aave LLC is awaiting a final ruling. As a temporary measure, the team has borrowed additional funds to cover the shortfall to ensure users are not impacted by delays.

The next phase of the recovery plan will focus on addressing the rsETH inflation issue and restoring market operations to normal. On Arbitrum, the liquidated rsETH will be burned, and KelpDAO will concurrently burn the corresponding LayerZero cross-chain message packet to completely eliminate the excess rsETH supply resulting from the attack. On Ethereum, the seized rsETH will be moved to a bridging lockbox. It will be supplemented by the ETH committed by the DeFi United Alliance to complete the lockbox endorsement. Once the endorsement is completed, the bridge will resume normal operations. Subsequently, rsETH withdrawals will reopen, the protocol parameters temporarily adjusted for liquidation will revert, and the remaining affected positions will be closed out in ETH form using the raised funds. Additionally, the LTV parameter for WETH on Aave V3 on Ethereum Core will soon return to normal. A compensation inquiry tool is now live for users affected by the rsETH incident to check their expected compensation amount.