- Relief milestone: DeFi United surpasses $300 million in ETH pledges (approximately 132,650 ETH) to cover losses tied to the April 18 exploit.
- Exploit details: Attacker forged a LayerZero message to mint roughly 116,500 unbacked rsETH tokens, with about 107,000 flowing into Aave lending positions and creating $123–230 million in bad debt.
- Key participants: Major contributors include Consensys, Joseph Lubin (30,000 ETH), Circle Ventures (purchasing AAVE tokens), Lido, EtherFi and additional DeFi protocols.
- Technical plan: Coalition published detailed restoration steps to fully back rsETH and normalize market conditions; governance approvals remain pending for several commitments.
- Industry context: Marks the largest coordinated DeFi recovery effort to date, following the sector’s biggest recent hack attributed to North Korea-linked Lazarus Group.
Aave and a broad coalition of DeFi protocols have crossed a major threshold in their coordinated recovery effort, securing more than $300 million in Ethereum commitments to address the fallout from Kelp DAO’s $292 million exploit earlier this month.
The initiative, branded DeFi United, aims to absorb bad debt on Aave and restore full backing for the affected rsETH token. The April 18 attack exploited a vulnerability in Kelp DAO’s cross-chain bridge powered by LayerZero, allowing the creation of unbacked rsETH that was subsequently used to borrow against Aave, according to The Block.
With roughly 107,000 rsETH ending up in lending positions, the protocol faced an estimated shortfall of $123 million to $230 million. DeFi United’s fundraising has now reached about 132,650 ETH, valued near $303 million at prevailing prices, enabling the group to proceed with its published technical restoration plan.
Prominent backers include Consensys and Ethereum co-founder Joseph Lubin, who together contributed 30,000 ETH, alongside Circle Ventures purchasing AAVE tokens to support the effort. Other participants such as Lido and EtherFi have also pledged capital, many of which still require governance approval before final transfer.
Aave founder and CEO Stani Kulechov highlighted the collaborative nature of the response in an official statement, noting that the recovery “would not be progressing as it is without them.” In a post on X, Aave confirmed the initiative is now ready to launch the restoration process following the milestone.
The move underscores growing maturity in decentralized finance, where protocols are increasingly willing to coordinate liquidity and capital to contain systemic risks rather than allow isolated exploits to cascade. While the effort mitigates immediate pressure on Aave and rsETH holders, it also raises longer-term questions about moral hazard and the precedent set by large-scale industry bailouts.
Market reaction has been measured, with rsETH trading closer to parity and Aave’s total value locked showing signs of stabilization. The development arrives as the broader DeFi sector continues to grapple with sophisticated cross-chain attacks, particularly those linked to state-sponsored actors.
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