[ARFC] Pause AAVE Buybacks

Finance
1

title: [ARFC] Pause AAVE Buybacks
author: @TokenLogic
created: 2026-04-22

Summary

Following the rsETH bridge incident on April 18, 2026, AAVE buybacks have been paused since April 19, 2026. This ARFC formalises the pause and outlines the conditions under which the buyback cadence will be reassessed.

Motivation

Overview

On April 18, 2026, an exploit on Kelp’s LayerZero rsETH bridge route caused unbacked rsETH to enter Aave V3 markets across multiple chains. The Aave Protocol Guardian and Risk Steward executed immediate defensive measures, including freezes on all rsETH and wrsETH reserves and interest rate adjustments on WETH reserves across affected deployments.

The incident, its scope, loss allocation scenarios, and potential bad debt figures are detailed in the LlamaRisk incident report and subsequent update:

Rationale for Pausing Buybacks

The range of potential outcomes for rsETH loss allocation, recovery, and any resulting DAO-level response remains wide. Until these external variables are resolved, preserving balance sheet flexibility is prudent. Deploying DAO revenue into buybacks during this window would reduce the treasury’s capacity to participate in a coordinated response should one become necessary.

For that reason, no buyback transactions have been executed since April 19, 2026. This ARFC formalizes and discloses the pause to the community.

Specification

AAVE buybacks are paused effective April 19, 2026, and will remain paused until the situation surrounding the rsETH incident becomes clearer. The cadence will be revisited at a later date, and any resumption will be communicated via the standard funding update.

Disclaimer

TokenLogic is an active service provider to the Aave DAO, the beneficiary of stream 100072 and the KPI as outlined in this publication. The scope of this engagement is available via this forum proposal.

TokenLogic supports and maintains an independent delegate voting platform within the Aave community.

TokenLogic and associated entities have no undisclosed material conflicts of interest at the time of submission.

Next Steps

  1. Gather feedback from the community.
  2. If consensus is reached on this ARFC, escalate this proposal to the Snapshot stage.
  3. If the snapshot outcome is YAE, implement the proposal.

Copyright

Copyright and related rights waived via CC0.

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2

Token holders’ rights are consistently ignored, yet they are always the first to be harmed.

Currently, AAVE is facing significant difficulties. AAVE Labs recently secured $25 million in funding to develop new AAVE products. Now, it seems that simply keeping AAVE alive is more crucial.

Could AAVE Labs return the $51 million it planned to apply for in its “AAVE will win” proposal, along with the $25 million already applied for, to the AAVE DAO? This would provide more substantial funding to ensure adequate compensation for users who may potentially lose funds. Protecting users’ rights is the future of AAVE.

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