Aave DAO has announced a proposal to deploy 25,000 ETH from the Treasury to support coordinated recovery efforts following the recent Kelp DAO exploit. The move is part of a broader “DeFi United” initiative aimed at restoring users’ funds and stabilizing affected lending markets.
On April 18th, KelpDAO suffered a major attack targeting the rsETH Ethereum LayerZero adapter, allowing hackers to exfiltrate assets and destroy the backing relationships between locked ETH collateral and tokens issued across the chain. This breach created cascading liquidity and solvency challenges across DeFi platforms that integrated rsETH and its wrapped variants.
More than $160,000 ETH gap remains as exploit recovery efforts gain momentum
According to the Aave DAO governance proposal, the attacker stole 152,577 rsETH. This is equivalent to approximately 163,183 ETH based on the prevailing exchange rate. Since then, coordinated interventions by ecosystem participants have significantly reduced the gap. Kelp DAO was able to freeze 40,373 rsETH, which is approximately 43,168 ETH. Additionally, the Arbitrum Security Council recovered 30,766 ETH that the attackers still had on the platform.
In particular, further recoveries are expected through the liquidation process on the lending platform. Up to 12,323 ETH could be recovered from the attacker’s positions on Aave, and an additional 1,845 ETH could be recovered from positions on Compound. In total, these efforts account for approximately 87,955 ETH, or just over half of the original deficit. Despite this progress, a funding gap of approximately 75,081 ETH still remains, resulting in further coordinated capital injections to fully restore support.
Aave DAO enters with 25,000 ETH commitment as coalition mobilizes
To close the remaining deficit, the DeFi United coalition is combining donations, lines of credit, and financial support. So far, ecosystem contributors such as EtherFi, Lido, and Ethena have pledged 14,570 ETH, and Mantle is extending its credit line up to 30,000 ETH.
Aave DAO’s offer to donate 25,000 ETH represents the foundation of this recovery stack. In particular, the contribution is “fixed”, meaning it cannot be reduced by future contributions. Instead, any additional funds raised will be used to repay borrowed capital, limiting Aave’s long-term exposure.
This plan requires approximately 120,015 ETH (excluding 43,168 ETH which was immediately frozen by Kelp DAO) to be reintroduced into the LayerZero lockbox to fully restore system integrity. However, some of the expected recoveries remain illiquid, creating the need for short-term financing from ecosystem partners.
Featured image from Vecteezy, chart from Tradingview
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