Circle Ventures jumps up $AAVE days after a $293 million KelpDAO exploit, amplifying Aave’s major debt shock, as Washington weighs a historic US stablecoin note.
The Aave board is preparing for another high-stakes vote as a proposal to pause $AAVE buybacks until the rsETH/KelpDAO incident is fully resolved will go live on April 28, extending a de facto freeze that has been in place since April 19. Posted on the Aave governance forum, the ARFC states that diverting protocol revenues to buybacks while the size and allocation of rsETH losses remain uncertain “would reduce Treasury’s ability to engage in a coordinated response should the need arise.”
The proposal formalizes the current freeze on government bond buybacks that followed the April 18 rsETH bridge exploit, in which unbacked rsETH entered the Aave V3 markets and forced the Aave Guardian to freeze rsETH and wrsETH reserves across multiple chains. “All Aave pools remain secure and fully operational,” the Guardian emphasized in an incident note, adding that the problem “does not arise from a vulnerability in the Aave protocol itself,” but from the KelpDAO and LayerZero infrastructure.
Governance under pressure amid $620 million hacking month
According to incident trackers and security firms, the April 2026 DeFi hacking wave has already siphoned off more than $620 million through a dozen exploits, led by KelpDAO’s roughly $292-$293 million bridge attack that siphoned 116,500 rsETH — about 18% of the supply — in a single transaction. Aave is one of the hardest hit in terms of second-order securities, with analytics site CryptoRank reporting that its total value fell from about $26.4 billion to $18.6 billion after the KelpDAO incident, wiping out nearly $8 billion in deposits.
On the Treasury side, a separate proposal provides for the allocation of 25,000 euros $ETH of Aave DAO’s reserves to a joint rSETH recovery plan, noting that the estimated deficit has fallen from 163,183 $ETH to about 75,081 $ETH after partial recovery and promised support. “In this environment, maintaining balance sheet flexibility is prudent,” the buyback ARFC said, promising that the cadence will be “revisited at a later date” and that any resumption will be communicated via standard funding updates.
That stance has become a flashpoint on DeFi Twitter, where some traders argue that suspending buybacks undermines confidence in $AAVE just as the country absorbs one of the biggest crises in its history. Others, including risk contributors active on the Aave forum, counter that retaining liquidity now gives the DAO room to participate in emerging “DeFi United” recovery frameworks and defend the protocol if further knock-on liquidations emerge from the rsETH shock.