Aave freezes rsETH markets on V3 and V4 after Kelp DAO rsETH bridge exploit

Aave has frozen the rsETH markets on Aave V3 and Aave V4 following an exploit involving the Kelp DAO rsETH bridge. Aave said its own smart contracts were not exploited and described the issue as specific to rsETH. The freeze halts new rsETH deposits and prevents borrowing against rsETH collateral while the situation is assessed. Aave is reviewing rsETH borrowing activity on the protocol that occurred after the exploit and said it will provide further updates as soon as possible. If the incident results in bad debt for the protocol, Aave noted that Umbrella assets could be used to cover the shortfall.