Circle Ventures snaps up $AAVE days after a $293M KelpDAO exploit, shoring up Aave’s bad‑debt shock while Washington weighs a landmark US stablecoin bill.
Aave governance is bracing for another high‑stakes vote as a proposal to pause $AAVE buybacks until the rsETH/KelpDAO incident is fully resolved goes live on April 28, extending a de facto halt already in place since April 19. The ARFC, posted on the Aave governance forum, argues that diverting protocol revenue into buybacks while the size and allocation of rsETH losses remain uncertain “would reduce the treasury’s capacity to participate in a coordinated response should one become necessary.”
The proposal formalizes the current stop on treasury buybacks that followed the April 18 rsETH bridge exploit, where unbacked rsETH surged into Aave V3 markets and forced the Aave Guardian to freeze rsETH and wrsETH reserves across multiple chains. “All Aave pools remain safe and fully operational,” the Guardian stressed in an incident note, adding that the issue “does not stem from a vulnerability in the Aave protocol itself” but from KelpDAO and LayerZero infrastructure.
Governance under pressure in a $620M hack month
According to incident trackers and security firms, the April 2026 DeFi hack wave has already drained more than $620 million across a dozen exploits, led by KelpDAO’s roughly $292–$293 million bridge attack that siphoned 116,500 rsETH — about 18% of supply — in a single transaction. Aave has been one of the hardest‑hit venues in second‑order effects, with analytics site CryptoRank reporting that its total value locked fell from around $26.4 billion to $18.6 billion after the KelpDAO incident, wiping out close to $8 billion in deposits.
On the treasury side, a separate proposal envisions allocating 25,000 $ETH from Aave DAO’s reserves to a joint rsETH recovery plan, noting that the estimated deficit has tightened from 163,183 $ETH to about 75,081 $ETH after partial recoveries and pledged support. “In this environment, preserving balance sheet flexibility is prudent,” the buyback ARFC states, promising that the cadence “will be revisited at a later date” and any resumption communicated via standard funding updates.
That stance has become a flashpoint on DeFi Twitter, where some traders argue suspending buybacks undercuts confidence in $AAVE just as it absorbs one of the biggest crises in its history. Others, including risk contributors active on the Aave forum, counter that locking in liquidity now gives the DAO room to participate in emerging “DeFi United” recovery frameworks and to defend the protocol if further knock‑on liquidations emerge from the rsETH shock.
