Aave V3 has restored WETH loan-to-value ratios on six chains to their pre-incident values, completing one of the final steps of the rsETH technical recovery plan. The change took effect on May 17, 2026 and applies to Aave's Ethereum Core, Ethereum Prime, Arbitrum, Base, Mantle and Linea markets. The protocol confirmed the rollback in an official post from its main account.
The rollback closes the conservative borrowing window that Aave imposed after the KelpDAO incident drained roughly $290M of rsETH-related collateral. During that window, lower WETH LTVs reduced the leverage that looped rsETH or related restaking positions could be reopened with, even on assets that were not themselves compromised. With the parameters back to baseline, borrowers can now access the same maximum borrow ratios that were live before the incident.
The parameters that just changed
A WETH LTV on Aave is the cap on how much ETH a depositor can borrow against their WETH collateral. When the rsETH situation broke earlier this quarter, Aave's risk team cut these ratios to reduce the borrowing capacity that recursive restaking strategies relied on. The cut hit looped positions hardest because looping depends on borrowing close to the LTV ceiling at every iteration.
Restoring the ratios to pre-incident values means three things in practice:
- Recursive WETH/wstETH/rsETH-style loops can be rebuilt at their old leverage levels on the six chains listed.
- Existing positions that were close to the temporary cap are no longer flagged as risky by that specific parameter, though the broader liquidation thresholds and oracle settings still apply.
- Aave's risk parameters now match what they were before the KelpDAO drain on the supply side, even though some isolated rsETH-specific limits may still differ.
Aave did not publish new numbers for each chain in the tweet itself. The community governance forum carries the per-market values for anyone tracking the exact ratios.
Inside the multi-month rsETH recovery plan
The rsETH technical recovery plan is a multi-step process led by KelpDAO and several risk service providers, with Aave participating as one of the most exposed lending venues. After the original drain, the priority was containing further bad debt rather than restoring growth.
Three workstreams ran in parallel:
- A repayment plan for affected rsETH holders, coordinated through KelpDAO.
- An audit and parameter review of every market that listed rsETH or used it indirectly as collateral.
- A liquidity normalization plan on lending protocols, which is the bucket that today's WETH LTV change falls into.
The reason WETH LTVs were touched in the first place is that the most damaging loops during the incident used WETH borrowing as the leverage rail. Cutting the WETH LTV across all six chains was a blunt but effective way to slow that channel down while audits ran. With the audits complete and recoveries paid, the rationale for the conservative cap fell away.
DeFi lending sits at $78K BTC
As of May 17, 2026, the broader market is in a soft patch. Bitcoin trades at $78,104 with a 4% drop over seven days, ETH is at $2,183 and the Fear and Greed index sits at 42 (Neutral) according to data fetched at publication. Restaking yields have compressed alongside ETH, which makes the timing of this restoration relevant for users who were waiting on the old leverage ceilings to come back before redeploying.
Aave remains the largest non-custodial money market and a useful reference point for borrowers comparing on-chain borrowing rates against the implicit cost of using a centralized crypto card. The cards that draw down on-chain credit lines, such as products built around self-custody options and protocols similar to Gnosis Pay, depend on lending markets like Aave staying liquid and operational. A clean recovery from a major incident is the kind of operational signal those issuers watch closely.
The KelpDAO link still has loose ends
Restoring WETH LTVs does not mean the rsETH chapter is closed. Rate models on the riskier collateral types remain tighter than they were pre-incident, and the rsETH listing itself still has additional safeguards beyond what was in place before. The next milestone watchers are tracking is whether Aave moves rsETH back to its prior supply caps once the rsETH peg holds at parity for a longer continuous window.
For now, the message from the rollback is narrow but real: the contagion that forced Aave to restrict basic WETH borrowing across half a dozen chains has been judged contained. Recursive ETH leverage is back on, six markets at a time.
Overview
Aave V3 has restored WETH LTVs to pre-incident values on Ethereum Core, Ethereum Prime, Arbitrum, Base, Mantle and Linea, in line with the rsETH technical recovery plan. The change reopens recursive ETH borrowing strategies that had been throttled since the KelpDAO drain and signals that Aave's risk team views the worst of the contagion as behind it.
