Miami – Aave Labs is poised to fundamentally overhaul how it assesses and lists collateral assets in its protocol, following the biggest DeFi exploit of 2026, and the overhaul could set a new standard for the entire industry.
Linda Jeng, chief legal and policy officer at Aave Labs, said at Consensus Miami 2026 that the protocol’s existing risk framework, while robust, was too narrowly focused on financial risk and volatility.
Going forward, any asset seeking to be listed on Aave will undergo a broader assessment regarding interoperability, cybersecurity vulnerabilities, and the asset’s underlying architecture. She cited rsETH, the rebound token issued by KelpDAO that was at the center of the April crisis, as the catalyst for the change.
In addition to the new assessment criteria, Jeng announced that Aave would publish a formal playbook for asset issuers – a set of minimum standards that projects must meet before they can be listed on the protocol. She also said that Aave would begin exploring systemic connections between protocols, moving away from focusing on analyzing pools in isolation and toward understanding how exposure in one corner of DeFi can transition to another.
“A crisis like this raises our standards,” she said.
The comments came as Jeng reflected on a month she described as “two weeks without sleep.” An attacker had exploited KelpDAO’s cross-chain bridge, minted 116,500 unbacked rsETH tokens worth about $293 million, and then deposited them in Aave as collateral to borrow real wrapped ether, leaving the protocol with hundreds of millions in bad debt.
Jeng, who worked as a regulator during the 2008 financial crisis, said the episode caused a strong sense of déjà vu. But the resolution, she argued, was clearly different. Instead of a government-led bailout, the industry mobilized itself. An initiative called “DeFi United,” which has secured commitments from Lido, EtherFi, Ethena and others, was launched to cover the collateral gap and prevent systemically important bad debt from further spreading across the DeFi lending markets.
“During the financial crisis we had to bail out the banks,” she said. “This is where we came together as an ecosystem to save ourselves.”