The rsETH markets on Aave V3 and Aave V4 have been frozen. Aave's contracts have not been exploited and this is an exploit related to rsETH.

The freeze follows an exploit of the Kelp DAO rsETH bridge. Freezing the rsETH markets prevents new deposits and borrowing against rsETH collateral while the situation is assessed.

We are reviewing information about rsETH borrows on Aave that occurred after the exploit and will share more details as soon as possible.

If the protocol accumulates bad debt from this incident, we'll explore paths to offset the deficit.