The largest lending protocol Aave has joined forces with leading DeFi platforms to stabilize the situation after the KelpDAO attack.
Leading lending protocol Aave has joined forces with major DeFi platforms to stabilize the situation after the KelpDAO attack. The projects launched the DeFi United initiative.
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Its goal is to restore backing for the rsETH token, which was at the epicenter of the hack, and prevent forced liquidations.
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Who Contributed What: From Lido to Aave’s Founder
Ecosystem participants have already provided specific commitments:
- Lido Finance — up to 2,500 stETH (~$5.8M)
- EtherFi Foundation — 5,000 ETH▲$1,666.43 (~$11.5M)
- Stani Kulechov (Aave founder) — 5,000 ETH (personal contribution)
- Golem Foundation — 1,000 ETH
- Mantle — discussing a 30,000 ETH loan from Aave DAO for three years, backed by tokens and 5% of protocol revenue
Ethena, LayerZero, Ink Foundation, Tydro, and Frax Finance have also joined the initiative.
Scale of the Crisis: How Aave Lost $17B in Deposits
On April 22, hackers withdrew 116,500 rsETH (~$292M) from the KelpDAO cross-chain bridge. Early data points to the North Korean Lazarus Group. Instead of selling the tokens, the attacker deposited nearly 90,000 rsETH as collateral into Aave and borrowed approximately $190 million in Ethereum (ETH) and other assets.
Because rsETH became unbacked, the positions cannot be liquidated. Aave now holds “bad debt.” Panic withdrawals led to a drop in protocol deposits from $45.8 billion to $28.6 billion—a decline of $17.2 billion.
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The DeFi sector’s total TVL fell from $99.5 billion to $83.7 billion. After DeFi United launched, the outflow stopped.
The AAVE▲$65.46 token rose nearly 2% over 24 hours, trading around $93.3.
What to Expect From the Market: Unity or Fragmentation?
Despite competitors uniting against a common sector problem, the fully irrecoverable losses of approximately 112,000 rsETH will still need to be covered by the community. Part of the stolen funds has already been withdrawn through Thorchain into bitcoin, complicating recovery.
MetaMask developer Taylor Monahan supported the initiative.
DeFi United’s success will demonstrate whether the industry can self-regulate without external intervention.
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