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Aave DAO proposes 25K ETH to help close rsETH shortfall after exploit created major unbacked collateral gap. Frozen assets, liquidations, and contributions have already covered over half of the deficit from the attack. Ecosystem funding grows with pledges and credit lines, while ...

Aave proposes 25,000 ETH ($58M) for Kelp DAO rsETH exploit recovery. DeFi United fund reaches $161M as TVL falls 27% in 2026 amid security concerns. The post Aave Moves to Allocate 25,000 ETH for Kelp DAO Exploit Recovery appeared first on Blockonomi.

How Is the DeFi Ecosystem Responding to the Kelp DAO Exploit? Aave service providers have proposed contributing 25,000 ETH, worth nearly $58 million, from the protocol’s DAO to a coordinated recovery effort known as DeFi United. The initiative aims to restore backing for rsETH fo...

In response to the recent cyberattack involving Kelp DAO, Aave’s governance team has acted swiftly. A proposal has been put forward to allocate 25,000 ETH from Aave’s treasury—valued at around $58 million—to DeFi United, a joint aid initiative. Continue Reading:Proactive Measures...

In the aftermath of the April 18 exploit that left KelpDAO’s rsETH with a significant backing shortfall, Aave’s service providers have taken the lead in organizing a coordinated industry response under the “DeFi United” initiative. The main objective is to contain systemic risks and restore confidence across interconnected protocols. Lido, Aave Unite Rather than focusing primarily on recovering the stolen assets, many of which were already bridged and swapped into Bitcoin via Thorchain, the effort has shifted toward stabilizing the ecosystem through recapitalization. Early damage control measures, such as Arbitrum’s security council freezing 30,766 ETH linked to the exploit, provided limited relief, but the broader challenge remains the deficit exceeding 100,000 ETH and its cascading impact on DeFi markets. The “dislocation” has placed pressure on lending and borrowing rates, strained liquidity conditions, and increased the likelihood of forced liquidations, especially for users exposed through leveraged strategies and vault products like EarnETH. Against this backdrop, Aave contributors stated that collaboration is important to achieving the best possible outcome for users. Multiple ecosystem participants are stepping forward with indicative commitments. Among the most notable is Lido DAO, whose contributors have proposed a capped, one-time allocation of up to 2,500 stETH to a dedicated relief vehicle. If approved, this contribution would form part of a fully funded recovery package designed specifically to close the rsETH deficit, rather than support partial measures that could leave users exposed to residual losses. “If a full-coverage solution is not reached, EarnETH vault may remain exposed to losses of up to approximately 9,000 ETH, which is why a vehicle that is sufficiently capitalised to cover the full deficit is materially preferable to a partial coverage.” The relief vehicle itself is structured with strict use-of-proceeds limitations, which focus solely on addressing the deficit rather than secondary effects such as position health or broader recapitalization needs. Kulechov Steps In Aave founder Stani Kulechov also pledged a personal contribution of 5,000 ETH. His announcement read , “Aave is my life’s work and we’re working nonstop to find the best possible outcome for users. I’m personally contributing 5000 ETH to DeFi United as we continue working together with partners on formalizing more commitments. I’m working to see this resolved and market conditions normalized as soon as possible.” The post Aave Mobilizes DeFi Giants to Contain $292M KelpDAO Fallout appeared first on CryptoPotato .

The KelpDAO exploit has shaken the crypto market, exposing how quickly one weak link can ripple across the entire system. What started as a technical failure has now turned into a broader test of resilience and trust. According to the source, the KelpDAO exploit began on April 18...

Several major decentralized finance (DeFi) projects have joined forces in a recovery initiative called “DeFi United” to stabilize the ecosystem following a recent exploit that caused substantial financial losses. Organizations such as Mantle, EtherFi Foundation, and Lido DAO are ...

KelpDAO has recovered 73,700 ETH from the rsETH incident, reducing the total shortfall from 163,200 ETH to about 89,500 ETH. Over 43,500 ETH in commitments have come from key players like Aave, Mantle, and Lido Finance to support recovery efforts. New proposals, including a structured recovery vault and liquidity backstops, aim to manage bad debt and stabilize the crypto ecosystem. KelpDAO has shared a fresh update on its ongoing recovery efforts following the recent rsETH incident. The team confirmed that a significant portion of funds has been recovered, though a large gap still remains. The update comes as multiple crypto projects continue to coordinate support under the “DeFi United” initiative. According to KelpDAO, the initial shortfall stood at 163,200 ETH after the incident. Since then, recovery efforts have brought back 73,700 ETH. This includes around 40,300 rsETH, equal to roughly 43,000 ETH, recovered directly by Kelp. In addition, the Arbitrum Security Council secured another 30,700 ETH. After these steps, the remaining shortfall now stands at about 89,500 ETH. KelpDAO Hack Recovery Backed by Defi United The recovery process has involved close coordination with several major players in the crypto ecosystem. Teams from Aave, EtherFi, Lido Finance, Golem, Mantle, Frax Finance, and LayerZero have all contributed in different ways. KelpDAO noted that more announcements are expected as discussions continue and contributions are formalized. Kelp and @aave have been working closely with ecosystem partners since April 18 to coordinate a recovery effort for rsETH holders. We want to share some factual statements about where we are, progress made, and the next steps. @ether_fi @ethena @LidoFinance @golemproject … pic.twitter.com/iwLcCcvIov — Kelp (@KelpDAO) April 24, 2026 Out of the remaining gap, confirmed public commitments have reached about 43,500 ETH so far. These pledges have come from Mantle, Aave founder Stani Kulechov, EtherFi, Lido, and Golem. KelpDAO said it is working directly with partners to finalize these contributions and move closer to closing the deficit. The team has added that rsETH holders remain the top priority. It added that updates will continue as more commitments are confirmed and funds are secured. The broader goal is to stabilize the system without putting pressure on users of any single protocol. At the same time, new ideas are being discussed within the Aave community to handle the situation in a structured way. Marc Zeller has proposed that instead of asking for donations, create a dedicated vault called “DeFi United ETH.” Under this plan, Aave’s wETH income would be redirected into the vault, with a capped annual yield of 5 percent. The proposal also includes tokenizing the vault deposits into a tradable asset named “AaveETH.” This would allow users to participate and also gradually cover the deficit through both interest and principal repayments. Zeller suggested opening the vault to public deposits and setting its size based on the worst-case shortfall. He believes that such a model could have raised funds quickly if implemented earlier. He also pointed out that Aave has strong revenue streams, while its DAO and Labs hold large reserves. In his view, these resources could help resolve the issue and reduce the risk of wider market panic. Zeller added that he would commit most of his own ETH to the vault if the plan moves forward. Along with this, Mantle has proposed using its treasury to provide a liquidity backstop. This support would help Aave manage bad debt created during the incident. The issue arose when attackers used unbacked tokens as collateral, which led to an imbalance across the system. By offering a loan, Mantle aims to stabilize the market and prevent forced liquidations. Such liquidations could have pushed prices lower and increased losses. Note that this proposal forms part of a wider industry effort to contain the damage and restore balance. Other contributors have also come forward with support. Lido Finance has committed 2,500 stETH to a dedicated relief fund. Several foundations and ecosystem players are now working together to ensure a coordinated response. Support for the plan has extended beyond protocol teams. Ben Zhou, co-founder and CEO of Bybit, has publicly backed Mantle’s proposal. He said the exchange would vote in favor of the plan as a major supporter of Mantle. Zhou noted that the crypto industry had come together during previous crises, including incidents involving Bybit, and said similar cooperation remains important now. The list of participants in the DeFi United effort continues to grow. It includes Aave, EtherFi Foundation, Lido DAO, Golem Foundation, Ink Foundation, LayerZero, Mantle, Arbitrum, Frax Finance, Ethena, Tydro, and Golem Factory.

Decentralized finance protocols have pledged more than $101 million in Ether to stabilize rsETH after the $293 million Kelp DAO exploit disrupted lending markets. According to Aave, the coordinated response, described as the “DeFi United” relief effort, has gathered commitments…