Aave Freezes rsETH Markets Following KelpDAO Bridge Exploit

Aave has temporarily frozen its rsETH markets in response to a significant exploit involving the KelpDAO bridge, which resulted in an estimated $177 million to $200 million in bad debt within Aave's wETH pool. According to NS3.AI, Omer Goldberg from Chaos Labs reported that the attacker managed to borrow 83,427 WETH and wstETH using unbacked rsETH across both Ethereum and Arbitrum networks. Following the news of the exploit, AAVE's price experienced an intraday decline of approximately 10%. Despite the incident, Aave confirmed that its contracts were not compromised and that withdrawals remain operational.