Aave plans comprehensive upgrade of collateral and listing standards after KelpDAO security incident

Odaily Planet Daily News: Linda Jeng, Chief Legal and Policy Officer at Aave Labs, stated during Consensus Miami 2026 that Aave's past risk framework overly focused on financial risk and price volatility. In the future, the framework will add assessments of cross-chain interoperability, network security vulnerabilities, and underlying asset structures.

This reform is a direct consequence of the rsETH incident that occurred in April. At that time, attackers exploited a vulnerability in the KelpDAO cross-chain bridge to mint approximately 116,500 unbacked rsETH (worth about $293 million). They then deposited these tokens as collateral into Aave to borrow real WETH, causing the protocol to face significant bad debt risks.

Jeng revealed that Aave will also publish a formal "listing standards manual" for asset issuers in the future and will begin evaluating the interconnectedness between DeFi protocols from a systemic risk perspective, rather than solely analyzing individual pools in isolation.

Additionally, the "DeFi United" bailout plan, involving participants such as Lido Finance, EtherFi, and Ethena, has been launched to fill collateral gaps and prevent the further spread of bad debts. (CoinDesk)