- Aave launched the “DeFi United” initiative with multiple crypto firms to address a $292 million loss caused by the KelpDAO exploit and stabilize rsETH backing.
- The attack used a LayerZero vulnerability to mint uncollateralized rsETH, triggering a liquidity crisis on Aave and a sharp $10 billion drop in total value locked.
- Major players like EtherFi, Golem Foundation, and Mantle are contributing funds and support to prevent bad debt and restore stability across the crypto lending ecosystem.
Aave has stepped in with a coordinated industry effort to contain the fallout from the KelpDAO exploit. To address this, Aave and several partners have launched a recovery initiative called “DeFi United.”
Aave’s ‘Defi United’ Sees Industry Support
The situation has pushed multiple crypto firms and foundations to come together and prevent further damage. Lido Finance, EtherFi, and Aave founder Stani Kulechov have already proposed funding measures. At the same time, Arbitrum has frozen a portion of the stolen funds. However, a large share of the assets has already been moved through THORChain, making recovery harder.
The current priority is to close the funding gap created by the exploit. Teams across the ecosystem are working to stabilize rsETH backing and avoid bad debt across lending platforms. Tydro and the Ink Foundation have joined the effort with Aave and other contributors. Their role is to support affected users and help maintain order in the lending markets.
Golem Foundation and Golem Factory have also stepped in with financial support. They are contributing a combined 1,000 ETH from their treasuries to strengthen the recovery plan. EtherFi is playing a key role as well. Its team has been working closely with Aave and other stakeholders to address the shortfall linked to rsETH.
Another one. @golemproject and @golemfoundation have made a 1,000 ETH contribution to the ongoing rsETH relief effort.
We appreciate their willingness to participate and help users.
DeFi United. https://t.co/9PigltCePg
— Aave (@aave) April 23, 2026
The EtherFi Foundation has proposed giving 5,000 ETH to a dedicated relief vehicle. The fund relief is meant to shield people and limit the growth of bad debt in the crypto world. It is noted by the foundation that the issue would require a concerted industry response to manage. LayerZero has also acknowledged it and committed to recovery.
The team said, “As part of an industry-wide recovery initiative, LayerZero’s proposed contribution would go towards the best path forward to restoring rsETH backing. We have been closely coordinating with Aave and all other parties like EtherFi, Ethena, Arbitrum, and Kelp who have been working tirelessly to ensure the best possible outcome for crypto.”
Aave’s founder and CEO, Stani Kulechov, has personally committed funds to support the initiative. He wrote, “ 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. DeFi United.”
In another development, Mantle has proposed a large loan to support Aave. During a governance discussion backed by the crypto exchange Bybit, Mantle suggested offering a 30,000 ETH loan. This would serve as a defensive mechanism against default risks created by the exploit. As it is typical for the field to rely on one another when under pressure, the move illustrates a pattern of mutual support.
Aave has then acted immediately to mitigate further risks. It paused rsETH reserves across several networks, including Ethereum Core, Arbitrum, Base, Mantle, and Linea. This pause is to protect the system as it is being restored. The KelpDAO incident had led to an estimated loss of approx $292 million and raised concerns about general instability across the crypto lending ecosystem.
The attacker was able to mint uncollateralized rsETH and use it to borrow nearly $190 million in assets on Aave. This disrupted the balance of collateral on the platform. As a result, panic spread among users, triggering heavy withdrawals. The total value locked on Aave dropped sharply by nearly $10 billion at one point.
