Aave Restores Operations After $300M Cross-Chain Exploit, Mobilizes Recovery Fund
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Summary
Aave restored normal operations after a $300 million cross-chain exploit threatened its protocol. The attacker exploited a third-party bridge (Kelp/Layerzero) by fabricating cross-chain messages to mint counterfeit rsETH tokens, which were deposited as collateral on Aave V3 to borrow 82,650 WETH and 821 wstETH. This triggered mass withdrawals that weakened liquidity pools. Aave Labs mobilized Lido, Ether.fi, Ethena, and Compound to create a $300 million recovery fund that backstopped compromised assets. Legal action was also required when judgment creditors froze ~$71 million in Ethereum via a restraining notice, prompting an emergency federal court motion.
Key quotes
· 4 pulledAave restored normal borrow-and-lend operations after a $300 million cross-chain exploit threatened protocol cash reserves.
The attacker exploited a third-party bridge run by Kelp and Layerzero by fabricating cross-chain messages, minting 116,500 counterfeit rsETH tokens and depositing them as collateral on Aave V3.
Aave Labs mobilized Lido, Ether.fi, Ethena, and Compound to create a $300 million recovery fund that backstopped compromised rsETH and kept deposits fully collateralized by authentic reserves.
Legal action was required when judgment creditors froze about $71 million in ethereum via a restraining notice, prompting an emergency motion in U.S. federal court.
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