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Aave governance is preparing for a high-stakes vote on whether to pause $AAVE buybacks until the rsETH/KelpDAO crisis is fully resolved, following a major exploit that has shaken DeFi liquidity and Aave’s balance sheet.
The proposal, posted on the Aave governance forum and scheduled to go live on April 28, would extend a de facto halt on treasury buybacks that has been in place since April 19. The ARFC argues that using protocol revenue for buybacks while the size and allocation of rsETH losses remain uncertain would reduce the treasury’s ability to support a coordinated response if one becomes necessary.
The current stop on treasury buybacks followed the April 18 rsETH bridge exploit, in which unbacked rsETH surged into Aave V3 markets. The incident led the Guardian to freeze rsETH and wrsETH reserves across multiple chains.
In an incident note, the Guardian said: “All Aave pools remain safe and fully operational.” It added that the problem did not stem from a vulnerability in the Aave protocol itself, but from KelpDAO and LayerZero infrastructure.
Incident trackers and security firms report that April 2026 has already seen more than $620 million drained across a dozen exploits. The largest driver was KelpDAO’s roughly $292–$293 million bridge attack, which siphoned 116,500 rsETH—about 18% of supply—in a single transaction.
CryptoRank reported that Aave’s total value locked fell from around $26.4 billion to $18.6 billion after the KelpDAO incident, wiping out close to $8 billion in deposits.
Alongside the buyback pause discussion, a separate proposal outlines allocating 25,000 ETH from Aave DAO reserves to a joint rsETH recovery plan. It also notes that the estimated deficit has narrowed 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 that the buyback cadence “will be revisited at a later date.” It adds that any resumption would be communicated via standard funding updates.
The proposal has become a flashpoint on DeFi Twitter. Some traders argue that suspending buybacks could weaken confidence in $AAVE at a time when the protocol is absorbing one of the biggest crises in its history.
Others, including risk contributors active on the Aave forum, contend that pausing buybacks preserves liquidity and gives the DAO room to participate in emerging “DeFi United” recovery frameworks, while also enabling it to defend the protocol if further knock-on liquidations arise from the rsETH shock.
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