Aave-Led DeFi United Unveils Plan to Restore KelpDAO rsETH Backing

TLDR

• Aave-led DeFi United plans rsETH recovery after April 18 bridge exploit

• DeFi United will refill the rsETH lockbox using committed ETH funding

  

• Aave and Compound positions face controlled liquidation under recovery plan

• WETH and rsETH markets remain frozen until restoration steps are complete

• KelpDAO rsETH backing plan targets full market recovery without shared losses

Aave-led DeFi United has released a plan to restore rsETH backing after the April 18 bridge exploit. The plan targets the affected lockbox and clears related lending positions across Aave and Compound. It also keeps frozen markets in place until DeFi United completes recovery steps.

DeFi United Targets rsETH Backing Restoration

The April 18 incident affected the Unichain-to-Ethereum rsETH route through a forged inbound packet. The forged message released 116,500 rsETH from the Ethereum-side adapter without a matching burn. As a result, the exploit created unbacked tokens and disrupted lending markets.

The released tokens moved across several addresses and venues after the incident. A large portion entered Aave V3 on Ethereum as collateral. Another portion moved to Arbitrum and supported positions on Aave Arbitrum.

DeFi United now plans to use committed ETH funding to refill the affected lockbox. The group will convert ETH into rsETH in tranches and deposit it into the lockbox. This staged process aims to restore full backing while limiting execution risk.

Aave and Compound Positions Face Controlled Liquidation

The recovery plan also targets eight affected positions across Aave Ethereum Core and Aave Arbitrum. DeFi United expects this step to recover about 13,000 ETH in value. The process needs governance approval across both deployments.

The plan will temporarily adjust the rsETH oracle price to support controlled liquidations. After that, DeFi United will move the recovered collateral into a managed multisig. KelpDAO will then redeem the collateral for ETH through its standard process.

Compound will follow a similar path to clear the exploiter’s position. That process could recover about 16,776 ETH worth of funds. Meanwhile, WETH and rsETH reserves will remain frozen across Ethereum Core, Arbitrum, Base, Mantle, and Linea.

Market Operations Remain Frozen Before Reopening

The final stage will restore normal lending market settings after recovery actions finish. DeFi United plans to unpause and unfreeze ETH and rsETH across affected instances. It will also restore loan-to-value ratios and reverse temporary configuration changes.

The plan depends on governance approvals, signed agreements, and correct technical execution. Besides, the attacker could interfere before the liquidation steps finish. Any such move may require more liquidation actions to resolve remaining deficits.

LayerZero and KelpDAO have added security measures before bridge activity resumes. However, DeFi United will still use tranche-based deposits to reduce pressure during execution. If all steps work as planned, rsETH backing should return and affected markets should stabilize.

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