Aave Launches DeFi United to Close $160M rsETH Gap

Steady attention without excessive speculation.

The initiative brings together contributions from across the DeFi ecosystem. Aave founder Stani Kulechov personally pledged 5,000 ETH to the fund. Confirmed pledges so far total approximately 13,500 ETH ($31.45 million), with Mantle proposing a separate 30,000 ETH loan facility.

“Aave is my life’s work and we’re working nonstop to find the best possible outcome for users,” Kulechov said. “I’m personally contributing 5,000 ETH to DeFi United as we continue working together with partners on formalizing more commitments.”

What Triggered the Crisis

On April 18, 2026, an attacker exploited a vulnerability in KelpDAO’s LayerZero bridge integration. The exploit allowed forged cross-chain messages that minted approximately 116,500 unbacked rsETH tokens. That amount was valued at roughly $292 million, or about 18% of rsETH’s circulating supply.

The attacker then deposited roughly 90,000 rsETH as collateral on Aave V3 and V4 markets across Ethereum and Arbitrum. Using the fraudulent collateral, they borrowed approximately $190 million in ETH and related assets. On Ethereum alone, the attacker drained about 52,834 WETH. On Arbitrum, they took roughly 29,782 WETH and 821 wstETH.

According to onchain analysis , the total borrowed amount reached approximately 99,600 ETH equivalent.

How Large Is the Gap

After partial recovery efforts, the net rsETH backing shortfall sits at approximately 68,900 ETH ($160 million). Arbitrum’s Security Council froze about 30,766 ETH ($71 million) tied to the exploit. That helped narrow the overall deficit.

The attacker reportedly bridged and swapped a portion of the stolen funds into Bitcoin via THORChain, according to BingX analysis. The Block reported that LayerZero attributed the attack to North Korea’s Lazarus Group based on preliminary indicators, though law enforcement has not confirmed the attribution. This complicates full asset recovery significantly.

Aave published an incident report on April 20 that modeled potential bad debt ranging from $123 million to $230 million. The final figure depends on how KelpDAO allocates the shortfall across affected markets and chains.

Market Fallout Hit Hard

The exploit triggered massive withdrawals across DeFi. According to CryptoRank data, Aave’s deposits dropped between $6 billion and $15 billion within days. Broader DeFi TVL fell by an estimated $13 billion overall.

The AAVE token price dropped more than 18% at its lowest point. Some ETH lending pools hit 100% utilization. That trapped depositors and strained looping strategies across multiple vaults.

Aave moved quickly to contain the damage. The protocol froze rsETH markets on V3 and V4 across Ethereum, Arbitrum, Base, Mantle, and Linea. Aave also temporarily froze WETH reserves on certain networks. Importantly, Aave confirmed that its core contracts remained secure throughout. The vulnerability existed entirely within KelpDAO’s bridge layer.

Who Is Contributing to DeFi United

The fund functions as a multi-contributor relief vehicle. It injects ETH and stETH directly to recapitalize rsETH and close the backing deficit. The scope covers only the rsETH shortfall, not secondary losses or health factor adjustments.

Kulechov personally pledged 5,000 ETH. The Ether.fi Foundation committed another 5,000 ETH. Lido Finance offered up to 2,500 stETH, pending an Aragon DAO vote. The Golem Foundation added 1,000 ETH. Together, these core pledges total about 13,500 ETH, according to The Block.

Mantle has proposed a 30,000 ETH loan facility to Aave DAO as part of the coordinated framework. If approved, total committed support would reach approximately 43,500 ETH. Ethena, LayerZero, Ink Foundation, Tydro, and Frax Finance have also signaled involvement. Specific amounts from those participants remain undisclosed.

The Funding Gap Remains Open

Even with all announced commitments, the numbers tell a challenging story. The shortfall stands at 68,900 ETH. Confirmed pledges cover roughly 13,500 ETH in direct contributions. Mantle’s loan facility would add 30,000 ETH if approved. That still leaves a gap of approximately 25,400 ETH, or roughly $59 million.

The team expects more commitments and is actively formalizing them. The initiative emphasizes ecosystem self-regulation over sole reliance on recovering the stolen assets.

Lido’s contribution highlights the interconnected risk. The Lido Research Forum noted that the EarnETH vault faces up to 9,000 ETH in secondary exposure without a full rescue. That gives Lido a direct incentive to help close the gap.

A Test for DeFi Self-Regulation

The KelpDAO exploit joins a growing list of cross-chain bridge catastrophes. The Ronin Bridge lost $625 million in 2022. Wormhole suffered a $320 million hack the same year. Each of these events exposed bridge infrastructure as one of DeFi’s most persistent vulnerabilities.

The initiative represents something new in crisis response. Instead of post-collapse litigation or individual damage control, the industry is coordinating a multi-party recapitalization in real time. Kulechov’s personal pledge signals both the severity of the threat and Aave’s commitment to its users.

The initiative also raises questions about how lending protocols should assess bridge-dependent collateral. On Ethereum mainnet, rsETH remains fully backed according to later assessments. The risk concentrated entirely in the LayerZero bridge layer connecting rsETH across chains.

What Comes Next for DeFi United

KelpDAO’s contracts remain paused while investigations continue. Aave’s rsETH markets stay frozen across all affected chains. The DeFi United team is actively formalizing additional pledges to close the remaining gap.

Whether total contributions reach the full 68,900 ETH target will shape the future of DeFi crisis response. For now, the initiative sends a clear signal. When systemic risk threatens DeFi, the ecosystem’s largest players will coordinate and put capital on the line.

This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.