Miami — Aave Labs is set to fundamentally reshape how it values 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 been too narrowly focused on financial risk and volatility.
Going forward, each asset seeking to be listed on Aave will undergo a broader assessment covering interoperability, cybersecurity vulnerabilities and the underlying architecture of the asset. She cited rsETH, the recovery token issued by KelpDAO that was at the center of the April crisis, as a catalyst for change.
Beyond the new evaluation criteria, Jeng announced that Aave will publish a formal manual for asset issuers – a set of minimum standards that projects must meet before they can be listed on the protocol. She also said Aave would begin to look at the systemic interconnections between protocols, moving away from analyzing pools in isolation to understanding how exposure in one corner of DeFi can spill over into another.
“After a crisis like this, our standards are higher,” she said.
The remarks come as Jeng reflects on a month she described as “two weeks without sleep.” An attacker had exploited KelpDAO’s cross-chain bridge, minting 116,500 uncollateralized rsETH tokens worth approximately $293 million, then depositing them into Aave as collateral to borrow wrapped real ether, leaving the protocol holding hundreds of millions in depreciated debt.
Jeng, who worked as a regulator during the 2008 financial crisis, said the episode triggered a strong sense of déjà vu. But the resolution, she argued, was markedly different. Rather than a government-led bailout, the industry mobilized. An initiative called “DeFi United,” which attracted commitments from Lido, EtherFi, Ethena and others, was launched to cover the collateral gap and prevent systemic bad loans from spreading further across DeFi lending markets.
“During the financial crisis, we had to bail out the banks,” she said. “Here we came together as an ecosystem to bail ourselves out.”
