Decentralized lending protocol Aave announced today, May 17, 2026, the restoration of loans collateralized by Wrapped Ether (wETH) in all its Version 3 (V3) implementations. This measure marks a critical milestone in the overcoming the liquidity crisis resulting from the exploit suffered by Kelp DAO on April 18, 2026, allowing the wETH market to regain full functionality. According to the statement issued by Aave, the loan-to-value ratios (LTV) of wETH have been restored to their pre-incident levels on the Ethereum Core, Ethereum Prime, Arbitrum, Base, Mantle and Linea networks. With this update, the asset returns to operating normally on Aaveeliminating the preventive restrictions that had been imposed to safeguard the solvency of the ecosystem. Aave founder Stani Kulechov highlighted the progress through a public statement in which he confirmed the completion of this new step within the “rsETH technical recovery plan.” Kulechov stressed that the normalization of LTVs is essential for users, who from now on «can now apply for loans with wETH on Aave again, including through guarantees and debt swaps.»
This technical move is a continuation of the reopening of rsETH markets which occurred on May 14, after weeks of freezing, as BitcoinDynamic reported. The recovery of the credit capacity of wETH is vital for the protocol, considering that this asset is one of the most used collateralization pillars in decentralized finance (DeFi).
The Aave community, in general, has positively valued the speed with which the process has been managed stabilization. Despite the magnitude of the initial event, users have highlighted that the recovery schedule has been met with greater efficiency than expected in situations of systemic stress.
Aave community celebrates the achievement. Source: screenshot of X, by BitcoinDynamic. Automatic translation by Google, original in English. Beyond community support on social networks, the event has revealed the systemic risks of decentralized finance. The price of the AAVE governance token is an indicator that the market has not yet regained its confidence:
AAVE token price in the last 30 days. Source: CoinGecko. The price of AAVE stands at $90.54 at the time of this publication, which is 22% less than the price it had before the Kelp DAO hack.
