Aave has brought WETH borrowing back online across Ethereum, Arbitrum, Base, Mantle, and Linea after a multi-day pause triggered by a technical incident involving KelpDAO's rsETH liquid restaking token.
The DeFi protocol's restoration of loan-to-value ratios marks the final phase of recovery from an oracle-related event that forced Aave's risk managers to freeze WETH collateral parameters as a precautionary measure. Users can now borrow against wrapped ether deposits again following governance votes that cleared the way for parameter normalization.
The incident stemmed from complications with rsETH price feeds that created potential liquidation risks across Aave's deployment networks. Risk administrators responded by zeroing out WETH LTV ratios—effectively preventing new borrows against the protocol's most liquid collateral asset—while they assessed the scope of exposure and coordinated with oracle providers.
Governance proposals passed across each affected network over recent days, authorizing the restoration of standard WETH parameters. The votes represented coordinated action by Aave DAO delegates who balanced user access against protocol solvency considerations during the recovery period.
WETH serves as Aave's deepest liquidity pool and most widely-used collateral type, making the temporary borrowing freeze a significant operational disruption despite the protocol's continued functioning for other assets. Lenders could still deposit and withdraw WETH throughout the incident, but borrowers faced restrictions on opening new positions or increasing existing debt.
The rsETH oracle issue highlighted ongoing challenges around liquid restaking token integrations as protocols navigate the complexities of multi-layered yield products. Restaking derivatives like rsETH introduce additional smart contract dependencies and pricing mechanisms that can create cascading risks when oracle feeds malfunction or report stale data.
Aave has expanded aggressively across L2 networks this cycle, with deployments on Base, Arbitrum, Mantle, and Linea complementing its Ethereum mainnet dominance. The coordinated response across all five networks demonstrated the protocol's ability to execute simultaneous parameter changes through its cross-chain governance infrastructure.
The restoration comes as Aave processes over $20 billion in total value locked across its various deployments, maintaining its position as DeFi's largest lending protocol. WETH borrowing typically accounts for a significant portion of that activity, particularly on mainnet where gas-intensive strategies favor the capital efficiency of using ETH as collateral.
Risk parameters for other restaking derivatives and liquid staking tokens remain under heightened scrutiny following the incident. Aave lists multiple ETH-derived assets including stETH from Lido, which has established more mature oracle infrastructure and deeper liquidity than newer restaking protocols.
The multi-network freeze and restoration process required separate governance votes on each deployment rather than a single cross-chain action, reflecting Aave's decentralized structure where each network operates semi-autonomously under DAO oversight. This architecture prevented the incident from affecting all deployments simultaneously but required coordinated communication across governance forums.
