Aave Proposes 25,000 ETH Contribution to DeFi United Recovery Effort for Kelp DAO Exploit

Aave governance proposed contributing 25,000 ETH to DeFi United, a coalition formed to cover losses from the April 18, 2026 Kelp DAO exploit that drained $292 million and left Aave with a shortfall between $123.7 million and $230.1 million. North Korean hackers exploited a single-verifier vulnerability in Kelp's LayerZero bridge to mint 116,500 unbacked rsETH tokens, which they used as collateral on Aave to borrow roughly $190 million in legitimate assets. Multiple protocols pledged support including Mantle's proposed 30,000 ETH loan via MIP-34, Aave founder Stani Kulechov's personal 5,000 ETH pledge, and contributions from Lido Finance, Golem Foundation, and Ether.fi. The exploit triggered over $10 billion in net withdrawals from Aave, while the Arbitrum Security Council froze 30,766 ETH worth $71.5 million linked to the attackers.

DeFi United Recovery Effort and Funding Commitments

• ▪Aave and a coalition of DeFi protocols launched a coordinated recovery effort branded DeFi United to absorb bad debt from the April 18, 2026 KelpDAO exploit
• ▪Aave founder Stani Kulechov personally pledged 5,000 ETH to DeFi United on Wednesday, April 23, 2026
• ▪Mantle's core team drafted proposal MIP-34 for a credit facility of up to 30,000 ETH to Aave DAO with interest at Lido's rate plus 1%, repayable over up to 36 months
• ▪Circle chief economist Gordon Liao proposed raising Aave's USDC borrowing cap to 50% from 14% to break the liquidity freeze on Wednesday, April 23, 2026
• ▪Golem Foundation and Golem Factory announced a combined 1,000 ETH contribution to DeFi United

The KelpDAO Exploit and Its Impact on Aave

• ▪KelpDAO attackers used unbacked rsETH tokens as collateral on Aave to borrow roughly $190 million in legitimate assets
• ▪The KelpDAO exploit triggered more than $10 billion in net withdrawals from Aave
• ▪The Arbitrum Security Council froze 30,766 ETH worth $71.5 million linked to the KelpDAO exploiter following law enforcement input
• ▪The April 18, 2026 KelpDAO exploit drained $292 million from KelpDAO's cross-chain bridge
• ▪The KelpDAO exploit left Aave with an estimated shortfall between $123.7 million and $230.1 million