Key Takeaways:
- After recouping the attacker’s holdings on May 6, Aave has moved forward to Phase II of its recovery plan.
- Arbitrum DAO and Mantle DAO voted on proposals that involve recovering $71 million in ETH for DeFi United.
- Aave introduced a compensation mechanism that the users affected by the issue can use to verify the potential reimbursements.
Aave is more than just keeping pace with the efforts to calm markets after the rsETH exploit caused significant chaos in the Ethereum and Arbitrum markets. The protocol has confirmed that all the critical steps of the process are complete, and the next steps will be dedicated to restoring rsETH backing, reopening withdrawals and normalizing market operations.
The recovery operation now involves technical fixes, DAO coordination, court-approved fund transfers, and temporary liquidity support.
Read More: TRON and HTX Dump $20M USDT for Aave’s Cross-Chain
Aave Liquidates Hacker Positions Across Ethereum and Arbitrum
Aave confirmed that eight positions linked to the exploiter on Aave V3 were liquidated on May 6.
https://t.co/Ly2CKjQOrG
— Aave (@aave) May 9, 2026
The recovered rsETH collateral was transferred to the Recovery Guardian following governance approval from the Aave DAO. According to the protocol, other users, including Umbrella stakers, were not impacted during the liquidation process.
At the same time, governance proposals from both Mantle DAO and Arbitrum DAO advanced the broader DeFi United recovery initiative.
Arbitrum DAO approved plans connected to the return of roughly $71 million in ETH that had been recovered by the network’s Security Council. Those funds are expected to support reimbursements and market restoration efforts tied to the exploit.
Read More: Solana Deploys USDT to Aave in DeFi Rescue, Brings AAVE On-Chain This Weekend
Court Ruling Adds Momentum to Recovery Process
Judge Approves Path for Frozen ETH Transfer
Aave also revealed new legal progress involving ETH temporarily immobilized during the recovery process.
According to the protocol, plaintiffs connected to North Korea-related judgments attempted to block access to the recovered funds through a restraining notice served to Arbitrum DAO on May 1.
Aave LLC filed an emergency motion for a hearing, which was heard on May 6. Later, the project got a nod of approval from the judge for Archiving the ETH, which was subsequently frozen by the latest update, to Aave LLC via an onchain vote conducted by Arbitrum DAO. The restraining order would then transfer alongside the assets.
rsETH Burn Plan and Compensation System Move Forward
The next phase of the recovery plan is to remove excess rsETH due to the exploit. On Arbitrum, liquidated rsETH will be burned.
Aave also confirmed that temporary protocol adjustments introduced during the exploit response will eventually be reversed. This includes bringing the WETH LTV on Aave V3 ETH back to normal after temporarily supressing it to zero as an emergency precaution.
In parallel, a compensation pool powered by Aave DAO and the project partners has also been activated. Users impacted by the malicious attack who have already had their assets frozen will be able to view what the compensation amounts would be within the new claims tool.
