Kelp DAO’s $400 million bad debt has been covered, but Aave paid a $12 billion price.

On May 26, Kelp DAO transferred the final batch of 20,373.72 rsETH to the LayerZero OFT Adapter, and Aave simultaneously announced that rsETH and all affected markets had returned to normal. In 37 days, all 116,500 rsETH had been replenished.

However, this only means rsETH has been re-pegged 1:1; it does not mean Aave’s books are clear. The 30,766 ETH frozen by the Arbitrum Security Council remain stuck in the U.S. District Court for the Southern District of New York, with ownership yet to be determined. Aave’s lost TVL also cannot simply return along with the rsETH.

The Bill Extends Beyond the TVL Column

According to DefiLlama data, on the day of the incident, April 18, Aave’s TVL was $26.396 billion; on May 25, it stood at $14.181 billion. Over a month later, more than $12 billion in funds had not returned.

The more difficult challenges lie ahead. The U.S. District Court for the Southern District of New York will hold a hearing on June 5 regarding the ownership of the 30,766 ETH frozen by the Arbitrum Security Council. Both Aave LLC and Gerstein Harrow submitted supplemental briefs before May 22. The judge had previously modified the restraining notice on May 8 to allow fund transfers, but the substantive judgment is still pending the June 5 determination.

Gerstein Harrow represents the families of victims of North Korean terrorism and holds an unenforced judgment worth $877 million. Regardless of the outcome, this lawsuit is a drain on the Aave brand.

The formation of DeFi United this time was possible because multiple parties were willing to backstop the situation: Stani Kulechov contributed 5,000 ETH personally, Consensys and Joseph Lubin committed up to 30,000 ETH, the Aave treasury allocated up to 25,000 ETH, along with a credit line of up to 30,000 ETH from Mantle, and support from Lido, Ether.fi, and others.

The community mobilization was unprecedented in scale, but Aave has exhausted this one-time card. If another upstream contamination event occurs, the same lineup may not be assembled again.

For instance, after the incident, Justin Sun withdrew approximately $174 million (including 65,854 ETH and several stablecoins) from Aave to Spark, accumulating over $1.3 billion in deposits on Spark. Whales are voting with their feet; capital has already migrated.

V4’s Openness is Being Slowed Down by Governance

Aave’s counterattack isn’t limited to V4, but V4 is its core strategy.

V4 went live on the Ethereum mainnet on March 30, featuring a Hub-and-Spoke architecture with three initial Liquidity Hubs. Aave Labs committed to a “security-first growth” approach, gradually increasing deposit caps. Deposits surpassed $10 million on April 8, crossed $50 million on May 9, and reached $86.13 million in total deposits by May 26, with active borrowing positions at $27.77 million.

This cadence was a responsible design choice before the rsETH incident but became a stress test afterward. Aave is juggling $200 million in bad debt on V3 while slowly expanding caps on V4

More critically, V4 must also contend with internal governance friction. In February 2026, Aave Labs submitted a strategic proposal bundling product revenue, service provider incentives, the V4 growth engine, and brand legal custody, requiring delegates to vote on four different risk dimensions simultaneously.

Marc Zeller, founder of the Aave Chan Initiative, publicly questioned the appropriateness of bundling such a large funding request with strategic approvals. This governance dispute has been brewing around the V4 launch, and each delay allows competitors to eat into Aave’s market share.

V4’s strength lies in the openness of its Spoke design: anyone can build a Spoke, and if it meets the criteria, it can connect to a Liquidity Hub as a credit line. This is why Babylon Labs chose to integrate its Trustless Bitcoin Vaults into V4 rather than elsewhere. However, the speed at which this openness materializes depends on whether the governance layer can keep pace.

Beyond V4, Aave is Fighting Three Battles

Aave V3 remains the cash cow. With an annualized revenue exceeding $100 million, the bulk of the $14.1 billion TVL resides on V3. The “Aave will win” proposal positions V3 in a “stable maintenance” phase, and Stani has publicly promised no forced migration and no deadline.

V4 and V3 will run in parallel for at least 24 to 36 months. V4 acts as an additive layer, handling heterogeneous scenarios that V3 cannot accommodate. Horizon, meanwhile, is an independent permissioned fork of V3, specifically serving institutional RWA.

Each of the three layers targets different growth areas. V4 targets new scenarios that V3’s risk architecture cannot handle, adding a new mission post-rsETH: giving capital that migrated to Morpho or Spark a reason to return to Aave. Horizon targets RWA traffic from traditional finance, operating in a completely separate pool from V3 and V4.

The Horizon 市場 officially launched in August 2025. It is a permissioned V3 instance deployed by Aave, specifically allowing institutions to use tokenized treasuries, corporate bonds, and money market funds as collateral to borrow stablecoins like USDC, GHO, and RLUSD.

As of May 26, it has accumulated over $500 million in net deposits, with a target of surpassing $1 billion by the end of 2026. Partners include BlackRock, Franklin Templeton, Circle, Ripple, and VanEck.

This path diverges from Morpho’s vault management model. Morpho uses third-party curators like Steakhouse and Gauntlet to curate vaults, capturing lending traffic from retail institutions like Coinbase. Aave, through Horizon, directly connects with asset managers from traditional finance to capture RWA.

The two paths cater to different institutional client profiles. Morpho serves fintech companies that use on-chain lending as a tool, while Aave serves asset managers who view the chain as a venue for issuance.

The capital migration following the rsETH event primarily affected the first type of client. The second type faces higher migration costs and reacts more slowly. The compliance framework, KYC processes, and asset admission audits that Aave has built on Horizon are things Morpho cannot replicate quickly in the short term after this event.

This is the only growth line for Aave that was not directly impacted by the rsETH incident, but its growth depends on the pace at which traditional finance integrates with DeFi.

There Will Be No Second DeFi United

Aave remains the largest protocol in the lending market. Its $14.1 billion TVL is still nearly double that of Morpho, and its years of deployment depth are unmatched in the short term.

However, the bill left by rsETH is not on the balance sheet; it resides in the column of institutional default preference for lending protocols. Spark’s TVL surged from $3.727 billion to $5.3 billion in one month, and Morpho, after hitting a bottom on April 21, slowly crawled back to pre-incident levels. These numbers will not automatically reverse course just because Aave’s market has recovered.

The speed at which V4 delivers on heterogeneous scenarios, combined with Horizon’s progress in institutional RWA, will determine whether Aave can reclaim lost market share. However, the former is bottlenecked by governance infighting, and the latter by traditional finance’s own pace of integration. And on both fronts, Aave can only wait.

DeFi United is not a permanent institution; it was a one-time coalition.

この記事はインターネットから得たものです。 Kelp DAO’s $400 million bad debt has been covered, but Aave paid a $12 billion price.

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