Ether borrowing limits on Aave are restored after a $230 million hack.

Aave has reinstated wrapped ether (WETH) borrowing limits across key networks, unwinding emergency restrictions put in place after April’s exploit as market risks begin to subside.

The DeFi lending protocol restored loan-to-value (LTV) ratios for WETH on six major chains, reversing safeguards introduced after attackers exploited a vulnerability tied to Kelp DAO’s rsETH token. The breach saw roughly $292 million in unbacked tokens minted and used as collateral to drain about $230 million in ether from Aave.

WETH is a cornerstone collateral asset in decentralized finance, widely used to access leverage and liquidity. During the incident, Aave slashed WETH’s LTV to 0%, effectively disabling its use as collateral in affected markets to limit further damage.

With conditions stabilizing, LTV ratios have now been returned to pre-exploit levels: 80.5% on Ethereum Core, 84% on Ethereum Prime, 80% across Arbitrum, Base, and Linea, and 80.5% on Mantle, according to governance data.

The exploit generated approximately 112,103 unbacked rsETH, of which about 106,993 has been recovered through liquidations and coordinated efforts — including 89,567 via Aave and 17,426 via Compound. A remaining gap of roughly 5,200 rsETH is expected to be covered by the DeFi United coalition.

The move signals a broader normalization across DeFi markets. As a primary source of collateral, WETH underpins borrowing activity and liquidity provision, and its temporary removal constrained leverage and reduced capital efficiency across ecosystems.

By restoring borrowing capacity, Aave is indicating that immediate contagion risks have largely been contained. However, legal uncertainties surrounding frozen assets and responsibility for losses remain unresolved in the wake of the exploit.

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