Aave s Recovery Process After 290 Million Hack

Aave has announced the transition to the second phase of its recovery process following the rsETH crisis. The protocol stated that the positions of the attackers, opened after the vulnerability on April 18, were fully liquidated in Aave V3 on May 6.
Previously, a vote was held regarding the return of approximately 71 million in Aave ETH to users, which had been returned by Arbitrum DAO. However, these funds were temporarily frozen by plaintiffs involved in a lawsuit against North Korea. Aave announced that a recent court ruling allows for the transfer of the disputed assets to Aave LLC. However, it was stated that Aave would temporarily need to resort to borrowed funds to cover the deficit until the full release of the funds upon completion of the legal process.
As part of the second phase of the recovery plan, it was also announced that the liquidated rsETH assets would be burned to balance the rsETH supply, which was allegedly inflated by the attacker. This step was deemed critically important for the gradual resumption of the withdrawal mechanism through the bridge and the return of the system to normal functioning. As you may recall, the security breach in the rsETH bridge based on LayerZero from KelpDAO caused significant liquidity pressure and the risk of bad debt across many DeFi protocols, including Aave.