Aave is navigating a critical security overhaul while expanding its regulated footprint. The decentralized lending protocol faces a complex landscape of institutional growth opportunities tempered by recent security challenges and governance adjustments. A new risk framework proposal mandates stricter asset controls and automated monitoring to prevent future bridge failures, following a $292M exploit on June 10, 2026. In direct response to the April KelpDAO bridge exploit, which saddled Aave with ~$196M in bad debt, Aave has proposed a comprehensive four-layer risk framework developed by LlamaRisk, setting binding standards for asset onboarding, bridge security (mandating at least three independent verifiers), and automated risk oracles.