Aave Leads DeFi United Coalition After $292 Million KelpDAO Exploit

The KelpDAO exploit, which resulted in the loss of approximately $292 million worth of rsETH, has significantly impacted confidence in decentralized finance (DeFi), causing the total value locked in the sector to drop from $99.5 billion to $83.7 billion. In response, Aave has initiated a "DeFi United" effort, gathering support from major DeFi protocols to restore the backing of rsETH, the liquid restaking token at the heart of the crisis. The exploit involved attackers draining rsETH from KelpDAO's cross-chain bridge and using it as collateral on Aave V3, leading to unbacked and unliquidatable positions, and consequently, bad debt for Aave. Panic withdrawals followed, causing Aave's deposits to plummet by $17.2 billion. Early indications suggest the Lazarus Group's TraderTraitor may be responsible. To address the situation, Lido Finance has proposed contributing up to 2,500 stETH, Mantle Treasury plans to lend up to 30,000 ETH, and Aave founder Stani Kulechov has personally committed 5,000 ETH. EtherFi Foundation, Golem, Ethena, LayerZero, Tydro, Ink Foundation, and Frax Finance are also providing support. Aave has also paused rsETH reserves across several networks to aid in recovery.

(Source：BeInCrypto)