Aave leads $101M DeFi rescue effort to restore rsETH backing after Kelp hack

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 exceeding 43,500 Ether as platforms move to contain the fallout and rebuild backing for the affected asset.

“We believe ecosystem collaboration matters most in moments like this, and our priority is achieving the strongest possible available outcome for users,” Aave said. 

“Multiple strong indicative commitments are now in place to join this effort toward restoring the backing of rsETH.”

A sharp liquidity gap emerged after attackers drained 116,500 rsETH from Kelp DAO’s LayerZero-based bridge on April 18. The assets were then used on Aave v3 as collateral to borrow wrapped Ether, leaving roughly $195 million in bad debt and sending stress across interconnected lending pools.

Commitments build as recovery effort takes shape

Among the largest contributors so far, Mantle has proposed lending up to 30,000 Ether to the Aave DAO in exchange for yield, while EtherFi Foundation has committed 5,000 Ether toward the recovery.

Support has also come from Golem Foundation and Golem Factory, which are jointly offering 1,000 Ether, alongside a conditional pledge from Lido DAO of up to 2,500 stETH through a dedicated vehicle.

“The proposal is designed to reduce broader ecosystem spillover and support an orderly resolution for affected users,” Lido DAO said.

Additional backing has been signaled by protocols including LayerZero, Ink Foundation, Tyrdo, and Frax Finance, although exact contribution sizes have not been disclosed. Aave founder Stani Kulechov has separately pledged 5,000 Ether, noting that further commitments are still being finalized with partners.

Freeze measures and laundering complicate recovery

Steps to contain the damage have already begun, with Aave pausing rsETH reserves across Ethereum, Arbitrum, Base, Mantle, and Linea as recovery plans move forward.

“This was done with the objective of recovering additional funds as the recovery plans progress. We will keep the community updated on the next steps as the efforts continue,” the platform said.

Arbitrum’s security council moved earlier in the week to freeze 30,766 Ether tied to the exploit, limiting further movement of some funds. Blockchain analysts, however, have indicated that around 75,700 Ether linked to the attack has already been laundered, leaving a significant portion of the losses outside immediate reach.

With pledges still coming in and negotiations ongoing, the recovery effort now hinges on whether the combined contributions can fully close the deficit left behind by one of the largest recent exploits in the restaking sector.