Aave said it liquidated eight positions tied to a thief on Aave V3 Ethereum Core and Arbitrum on May 6, marking a new step in the protocol’s rsETH recovery effort. The recovered rsETH collateral was then transferred to the Recovery Guardian under an earlier Aave Improvement Proposal. According to Aave, the process did not affect other users or Umbrella stakers.
Liquidations completed across Ethereum and Arbitrum
The action targeted positions linked to the exploit and moved recovered collateral into a formal recovery framework already approved through governance. Aave said the work is being carried out alongside partner DAOs and legal measures designed to recover affected ETH and restore backing for rsETH after the exploit disrupted market conditions.
Mantle DAO has also approved its participation in the DeFi United recovery initiative through governance. Separately, Arbitrum DAO is advancing a proposal involving $71 million in recovered ETH. The stated objective is to return those funds to affected users of the Aave protocol.
Court ruling clears path for onchain transfer vote
The legal track became more complicated on May 1, when plaintiffs holding judgments against North Korea served a restraining notice on Arbitrum DAO covering the immobilized ETH. Aave LLC responded with an emergency motion asking the court to vacate that notice, and a hearing was held on May 6.
After the hearing, both sides submitted letters to the judge. Aave LLC asked that the immobilized ETH and the restraining order be transferred directly to the company. The judge later approved that proposal, authorizing an onchain Arbitrum DAO vote to transfer the ETH to Aave LLC. Aave added that while the court continues to consider other issues, separate funds may temporarily cover any remaining difference and recovery work is still moving ahead.
Next phase centers on restoring backing and reopening withdrawals
Aave said the next stage will focus on reestablishing rsETH backing and returning affected markets to normal settings. On Arbitrum, liquidated rsETH will be burned to reduce the inflated supply created by the exploit. Kelp will also retire the pending LayerZero packet on Ethereum to stop any additional rsETH minting, while seized rsETH on Ethereum will be moved to the bridge lockbox.
According to Aave, ETH committed by the broader DeFi United coalition will be used to restore lockbox backing. Once that is completed, normal bridge operations may resume and rsETH withdrawals could reopen. The protocol also plans to unwind temporary market configurations introduced during the liquidation process, including a possible return of WETH loan-to-value settings on Ethereum Core to normal levels.