Aave DAO Governance Faces High-Stakes Vote Over Buybacks Amid KelpDAO Fallout

Aave DAO is facing a critical decision as it votes on a proposal to pause $AAVE buybacks until the rsETH/KelpDAO crisis is resolved. The move follows an April exploit spree that drained more than $620 million from DeFi protocols, led by KelpDAO's $293 million bridge hack.

The proposal formalizes the current stop on treasury buybacks that followed the April 18 rsETH bridge exploit, where unbacked rsETH surged into Aave V3 markets and forced the Aave Guardian to freeze rsETH and wrsETH reserves across multiple chains. 'All Aave pools remain safe and fully operational,' the Guardian stressed in an incident note, adding that the issue 'does not stem from a vulnerability in the Aave protocol itself' but from KelpDAO and LayerZero infrastructure.

A separate proposal envisions allocating 25,000 ETH from Aave DAO's reserves to a joint rsETH recovery plan. The estimated deficit has tightened from 163,183 ETH to about 75,081 ETH after partial recoveries and pledged support. The buyback ARFC states that preserving balance sheet flexibility is prudent and promises that the cadence 'will be revisited at a later date'.