Miami – Aave Labs is set to fundamentally reshape the way it evaluates and lists collateral assets on its protocol, following the biggest DeFi exploit of 2026, and the overhaul could set a new standard across the industry.
Linda Jeng, chief legal and policy officer at Aave Labs, said at Consensus Miami 2026 that the protocol’s existing risk framework, while robust, had focused too much on financial risk and volatility.
Going forward, every asset seeking to list on Aave will face a broader assessment covering interoperability, cybersecurity vulnerabilities, and the underlying architecture of the asset. He cited rsETH, the recovery token issued by KelpDAO that was at the center of the April crisis, as the catalyst for change.
Beyond the new evaluation criteria, Jeng announced that Aave would publish a formal manual for asset issuers: a set of minimum standards that projects must meet before they can be included in the protocol. He also said Aave would begin examining systemic interconnections between protocols, moving from analyzing groups in isolation to understanding how exposure in one corner of DeFi can impact another.
“A crisis like this raises our standards,” he said.
The comments came as Jeng reflected on a month she described as “two weeks without sleep.” An attacker had exploited KelpDAO’s cross-chain bridge, minting 116,500 unbacked rsETH tokens worth approximately $293 million and then depositing them into Aave as collateral to borrow real wrapped ether, leaving the protocol with hundreds of millions in impaired debt.
Jeng, who worked as a regulator during the 2008 financial crisis, said the episode provoked a strong sense of déjà vu. But the resolution, he argued, was markedly different. Instead of a government-led bailout, the industry mobilized. An initiative called “DeFi United” was launched, which has secured commitments from Lido, EtherFi, Ethena and others, to cover the collateral shortfall and prevent systemic bad debt from spreading further in DeFi lending markets.
“In the financial crisis we had to bail out the banks,” he said. “Here we come together as an ecosystem to rescue ourselves.”
