Aave, one of the largest lending protocols in DeFi, may tighten token listings after the KelpDAO incident showed how one weak bridge route can spill straight into lending markets.
LlamaRisk, a risk service provider for Aave, published a proposed framework on Tuesday, June 9, that would govern asset listings, bridge routes, automated monitoring and chain deployments across Aave V3, V4 and Aave Horizon, a lending market for borrowing stablecoins against tokenized real-world assets.
The proposal would turn several risk issues into hard-block conditions. Missing or weak bug bounties, missing timelocks, opaque signer setups, unresolved audit issues, poor bridge configurations or refusal to share key legal or operational details could stop an asset from being listed.
LlamaRisk
For assets already listed on Aave, a hard block would trigger "an immediate exposure-tier review," which could lead to lower caps, lower loan-to-value ratios or, in the worst case, deprecation, the proposal reads.
Read also: LayerZero drops 1-of-1 verifier setup after KelpDAO hack
No more bridge exploits
The framework also puts bridge risk under tighter rules. For bridge routes carrying Aave exposure, it says "a minimum of three independent verifiers is required" and that "one-of-N and two-of-N configurations are not acceptable as a default baseline regardless of vendor," referring to the KelpDAO incident where one hacked bridge route spilled into lending markets.
- KelpDAO, a liquid restaking protocol behind the rsETH token, suffered a bridge exploit earlier in April that affected Aave markets.
- Aave's April 20 incident report said an attacker exploited Kelp's LayerZero V2 Unichain to Ethereum rsETH route, which "was configured as a 1-of-1 DVN."
- The report said the attacker used a fake bridge message to release 116,500 rsETH that shouldn't have been unlocked.
- Of that amount, over 89,500 rsETH was deposited on Aave, leaving the protocol with two possible bad-debt scenarios.
- One came in at $123.7 million, while the other reached $230.1 million, depending on how losses were handled outside Aave.
Under the new proposal, Aave would also lean more on automated defenses instead of waiting for governance to catch up after the fact. The framework says an automated freeze guardian would fire when "a hard adverse signal is detected on the asset's stack," while cap oracles could cut exposure before a full incident lands in pool accounting.
As of press time, there's no clear voting date or implementation timeline for the proposed framework. The draft says the rules would apply once the framework is endorsed by Aave governance.
More context: OpenZeppelin founder says AI makes DeFi unsafe, urges exits from Aave, Compound