A crypto coalition releases technical proposal to save Aave users from a massive token exploit

Following the Kelp DAO hack on April 18, which resulted in the creation of 116,500 unbacked rsETH tokens, a coalition named DeFi United has released a technical recovery proposal. The exploit involved a bridge vulnerability that allowed attackers to forge messages, creating systemic risk as these unbacked tokens were used as collateral on platforms like Aave and Compound.

The proposal outlines a two-pronged approach: first, re-collateralizing rsETH by feeding committed ETH back into the system in stages; and second, unwinding the bad loans created by the exploit. To prevent market chaos, the plan suggests temporarily adjusting the valuation of rsETH within lending protocols to allow for controlled liquidations of the fraudulent positions. This process is estimated to recover approximately 13,000 ETH from Aave alone to fill the deficit.

(Source：CoinDesk)