DeFi United Plans rsETH Recovery After $292M KelpDAO Bridge Exploit

Highlights:

• DeFi United plans to restore rsETH backing after KelpDAO’s $292 million bridge incident.
• The recovery aims to resolve attacker-linked positions across Aave and Compound safely.
• Major crypto firms have pledged support, but some funds still need governance approval.

DeFi United, a coalition of leading blockchain ecosystem participants, has released a technical plan to restore backing for KelpDAO’s rsETH after the April 18 bridge incident that shook several DeFi markets. The plan, shared on Tuesday via Aave, focuses on rebuilding rsETH’s collateral support and resolving positions linked to the attacker.

Advertisement

Aave: DeFi United Releases Plan to Restore KelpDAO rsETH Backing

According to Aave, DeFi United released a plan to restore KelpDAO rsETH backing after the April 18 bridge incident, which caused 116,500 rsETH to be abnormally released from the Ethereum-side adapter.

The plan… pic.twitter.com/HSo3PnQpdD

— Wu Blockchain (@WuBlockchain) April 28, 2026

How the KelpDAO’s rsETH Exploit Happened

The problem began with a cross-chain bridge linked to KelpDAO. These bridges let tokens move between blockchains, but they depend on trusted checks before releasing funds. In this case, that check failed.

The attacker made the system believe that rsETH had been burned on one chain, even though no real burn took place. After that false signal, the bridge released 116,500 rsETH on another chain. At the time, those tokens were worth about $292 million.

The newly released rsETH had no real assets behind it. The attacker then deposited 89,567 rsETH into Aave on Ethereum and Arbitrum and used it as collateral to borrow about 82,650 WETH, worth nearly $190 million, along with 821 wstETH. Since the collateral was not properly backed, Aave was left exposed to real borrowed assets against weak rsETH collateral. Later, the Arbitrum Security Council froze 30,766 ETH (worth about $71 million) linked to the attack.

The Arbitrum Security Council has taken emergency action to freeze the 30,766 ETH being held in the address on Arbitrum One that is connected to the KelpDAO exploit. The Security Council acted with input from law enforcement as to the exploiter’s identity, and, at all times,…

— Arbitrum (@arbitrum) April 21, 2026

DeFi United Plans a Step-by-Step Recovery

DeFi United is a coalition of ecosystem participants working on the recovery effort. The group’s plan has two main goals. First, it wants to restore rsETH backing so the token can return to normal market use. Second, it aims to recover about 107,000 rsETH that remain linked to exploiter-controlled positions across Aave and Compound. 

The recovery will not happen in one single move. The plan says committed ETH will be converted into rsETH in separate tranches. These tranches will then be deposited into the affected bridge lockbox contract. This staged method is designed to reduce execution risk and help the protocols manage the process carefully.

For rsETH to return to normal, its backing needs to match Kelp’s exchange ratio of 1.07 ETH. DeFi United said it has secured the ETH commitments needed for that step, but final execution still depends on governance approvals, signed agreements, and technical actions from the protocols involved. 

Some parts of the recovery require decisions from decentralized autonomous organizations, or DAOs. These are community-governed groups that vote before using treasury funds or changing protocol settings. That is why the plan cannot move fully until the required votes and agreements are complete.

Aave, Compound, KelpDAO, LayerZero, and other ecosystem participants are connected to different parts of the recovery. The plan also involves clearing affected lending positions in a controlled way. If successful, Aave could recover about 13,000 ETH from affected positions, while Compound’s parallel process could recover more ETH from its side.

Who Is Contributing to the Recovery

Some prominent players in the cryptocurrency space have come out in support of DeFi United. The group has secured $303 million in commitments so far. But it’s not all available yet. Other players still have to gain approval from their governance structures to release money.

Consensys, and its CEO Joseph Lubin, have pledged up to 30,000 ETH. Their funds are structured so that they can be released early while other projects go through the approval process. Aave founder Stani Kulechov has put in 5,000 ETH. He added that recovery would not proceed without the backing of some of the leaders in the ecosystem.

Other key contributors are also on board. Lido Finance has pledged up to 2,500 stETH, while EtherFi has proposed a 5,000 ETH proposal to help safeguard users and mitigate bad debt in DeFi. The recovery fund is now at full support of rsETH, Kulechov said. 

Advertisement