Trading in Wrapped Ether (WETH) has returned to normal on Aave, the decentralized lending protocol confirmed, as efforts to recover funds from a recent exploit affecting the rsETH token make headway. The platform had temporarily frozen WETH reserves as a precautionary measure following the security incident.
Why the temporary freeze was applied
Aave froze WETH — alongside the rsETH and wrsETH reserves — after an exploit targeted the platform. The move was a standard safety step, giving the protocol time to assess the situation without exposing users to further risk. The freeze was not triggered by any vulnerability in WETH itself but was part of a broader containment strategy.
The exploit did not affect the core Aave smart contracts, the company said. Instead, it stemmed from a vulnerability in a third-party integration that allowed the attacker to manipulate certain positions. By pausing the affected assets, Aave prevented the attacker from withdrawing funds or causing additional damage while the team worked on a solution.
rsETH recovery progress
The rsETH token, a liquid staking derivative, was the primary target of the exploit. Recovery efforts have since made progress, with the protocol reporting that a significant portion of the stolen funds has been identified and is being returned. The exact amount recovered has not been disclosed, but the process is ongoing.
Aave's decision to lift the freeze on WETH signals that the immediate risk has passed. The protocol emphasized that normal operations have resumed and that users can once again supply and borrow WETH as usual. The rsETH and wrsETH markets remain paused, but the team expects to restore them once recovery is fully complete.
The incident highlights the challenges DeFi platforms face when relying on external tokens and integrations. Aave's quick response — freezing assets within minutes of detecting the exploit — likely limited the damage. No user funds were lost beyond those directly involved in the exploit, the company said.
For now, WETH traders are back to business as usual, while the rsETH recovery team continues its work. The protocol has not announced a timeline for fully reopening the rsETH markets, but the progress suggests it could be a matter of days.
