The KelpDAO exploit dealt a serious blow to trust in the DeFi sector and triggered a capital outflow. Since April 18, the total value locked in the industry has dropped from $99.5 billion to $83.7 billion.
Against this backdrop, Aave has led an initiative called DeFi United. Major protocols have already joined. The main goal is to restore the collateralization of rsETH, the liquid restaking token that was at the center of the crisis.
Aave Head Pledges 5,000 ETH as DeFi United Coalition Gains Momentum
On April 18, hackers withdrew 116,500 rsETH worth about $292 million via the cross-chain bridge KelpDAO. The stolen tokens were then used as collateral in Aave V3, which enabled them to borrow large amounts of Wrapped Ether.
The problem is that rsETH lost its collateral. Because of this, positions are virtually impossible to liquidate, and Aave has accumulated “bad” debt.
This led to panic and mass withdrawals. The total amount of deposits in Aave fell from $45.8 billion to $28.6 billion—a decrease of $17.2 billion. According to LayerZero, the attack was most likely carried out by the Lazarus group through the TraderTraitor scheme. This is already being called the largest DeFi hack of 2026.
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In a post on X, the Aave team stated that preliminary agreements have already been reached with participants willing to help restore rsETH collateral.
Lido Finance has proposed allocating up to 2,500 stETH to a special support fund. Mantle Treasury has put forward an initiative to provide up to 30,000 ETH as a loan to Aave DAO.
Aave founder Stani Kulechov personally pledged to contribute 5,000 ETH.
“Aave is my life's work, and we are working nonstop to find the best solution for users. I am personally allocating 5,000 ETH to DeFi United and continue to work with partners on new commitments. My goal is to resolve the issue as quickly as possible and stabilize the market,” he wrote.
Additionally, the EtherFi Foundation has proposed another 5,000 ETH, and Golem has allocated 1,000 ETH. Other projects joining the initiative include Ethena, LayerZero, Tydro, Ink Foundation, Frax Finance and others.
To stabilize the situation, Aave has suspended rsETH reserves on Ethereum Core, Arbitrum, Base, Mantle and Linea networks.
