Aave liquidates KelpDAO attacker wallets, unfreezing 30,765.67 ETH

Aave will liquidate the KelpDAO exploiter’s remaining positions to recover funds after the KelpDAO hack. Arbitrum Governance approved unfreezing 30,765.67 ETH that had been frozen by the Arbitrum Security Council as part of a coordinated remediation plan to restore rsETH’s full ETH backing and make rsETH holders whole. Aave said the decision passed with over 90% support: 1,600 addresses backed by 190M ARB tokens voted in favor. Implementation steps include liquidating the attacker’s position on both Ethereum and Arbitrum. Aave also used internal risk controls to stop further borrowing when the attacker’s position exceeded a risk threshold. On the market side, Aave reported bad loans estimated at roughly $170M–$230M, but the protocol is recovering. Aave stabilized TVL above $15B after an initial ~$10B outflow; vault utilization has returned closer to normal, with lending rates normalizing (average lending rate ~2.76%, borrowing rate ~4.08%). However, total lending is down ~35% over 30 days and stablecoin liquidity down ~46.3% over a month, implying slower activity despite improved risk metrics. Separately, KelpDAO decided to move its cross-chain infrastructure to Chainlink’s CCIP ecosystem, after earlier views that LayerZero cross-chain tooling contributed to the ~$292M exploit.