Aave Halts rsETH Markets on V3 and V4 After Kelp DAO Bridge Exploit

Aave said it has frozen rsETH markets on both Aave V3 and Aave V4 following the attack on Kelp DAO. The protocol emphasized that Aave contracts were not exploited and attributed the incident to an rsETH cross-chain bridge exploit affecting Kelp DAO. The freeze blocks new rsETH deposits and prevents users from borrowing against rsETH as collateral. Aave said it is reviewing all rsETH-related lending activity across the platform and will assess options to cover any potential shortfalls if the protocol ends up with bad debt. Kelp DAO's cross-chain bridge was previously compromised, with roughly $292 million in rsETH reported stolen, creating potential bad-debt exposure for Aave V3.