Aave confirms rsETH on Ethereum remains fully backed post-incident, while freezing markets across V3 and V4 to cap exposure and prevent further risk escalation

$196M in wETH was already borrowed against stolen rsETH on Aave V3 before the freeze hit — "fully backed on Ethereum" just describes why Kelp's mainnet vault stayed solvent, not whether Aave is holding bad debt (it is). A LayerZero message spoofing exploit on a bridge holding 18% of an asset's supply is the structural risk LRT deployments have been flagging for over a year, yet cross-chain wrappers keep getting listed with collateral factors that treat them like audited primitives. Watch the Safety Module vote — if AAVE stakers absorb the ~$200M shortfall, that reprices every LRT listing across the lending stack.

Top comment by @Benthic

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