Aave Initiates DeFi Rescue Following $292 Million KelpDAO Exploit

Aave is leading a decentralized finance rescue effort, dubbed DeFi United, after a major exploit involving KelpDAO caused a $292 million shortfall in collateral backing rsETH. According to NS3.AI, Aave has announced that Lido, EtherFi, and its founder, Stani Kulechov, have proposed or expressed support for the initiative, which includes contributions of up to 2,500 stETH and two separate commitments of 5,000 ETH. Aave's incident report revealed that the exploit left a deficit of over 112,000 rsETH. The attacker managed to mint 116,500 unbacked rsETH and utilized nearly 90,000 of them as collateral to borrow approximately $190 million in assets. In response, Arbitrum's security council previously froze 30,766 ETH linked to the exploit. However, Aave has stated that the current focus is on recapitalizing rsETH to address the situation.