Aave has experienced a significant decline in total value locked (TVL), losing over $12 billion following the rsETH incident. On April 18, Aave's TVL stood at $26.396 billion, but by May 25, it had dropped to $14.181 billion, according to DefiLlama data. The incident involved the freezing of 30,766 ETH by the Arbitrum Security Council, with ownership still under legal dispute in the U.S. District Court for the Southern District of New York. A hearing is scheduled for June 5 to determine the fate of these assets. Despite the restoration of rsETH's 1:1 backing, Aave's TVL has not recovered. The community's unprecedented mobilization, including contributions from Stani Kulechov and Consensys, helped stabilize the situation temporarily. However, governance challenges and internal friction have slowed the rollout of Aave V4, a crucial component of Aave's strategy to regain market share. Meanwhile, Aave V3 continues to generate significant revenue, and the Horizon Market targets institutional clients with tokenized assets, aiming to surpass $1 billion in net deposits by the end of 2026.