Aave DAO Weighs 25,000 ETH Contribution to rsETH Recovery Fund

Aave's decentralized governance is reviewing a proposal to allocate 25,000 ETH from the DAO treasury to support recovery efforts tied to the April 18 exploit of Kelp DAO's rsETH bridge, according to a Thursday proposal from Aave service provider TokenLogic cited by CoinDesk. If approved, the contribution would make Aave the largest single backer of DeFi United, a coalition that also includes EtherFi, Lido, Ethena, Mantle, Ink Foundation, BGD Labs, and individual donors. The group aims to restore full backing for rsETH and safeguard users exposed through affected Aave V3 markets. The April 18 incident saw Kelp's LayerZero bridge adapter lose 152,577 rsETH, creating an initial shortfall estimated at about 163,183 ETH. Recovery actions have narrowed the gap: Kelp froze tokens worth roughly 43,168 ETH, the Arbitration Security Council froze 30,766 ETH linked to the attacker, and another 14,168 ETH is expected from liquidations of the hacker's positions on Aave and Compound. The remaining deficit is now estimated at approximately 75,081 ETH. The proposal outlines a funding mix to cover that remaining shortfall: 14,570 ETH from public contributions, a 30,000 ETH credit line from Mantle, and 25,000 ETH from the Aave DAO treasury. Execution requires pre-depositing a total of 120,015 ETH into LayerZero's escrow; because some funds are not yet available, the plan includes arranging a short-term bridge loan to cover timing gaps. The draft also authorizes Aave Labs to use DAO assets and future protocol revenues as collateral for financing. The plan depends on several external steps, including Kelp reopening withdrawals, LayerZero reopening its bridge, and the Arbitration Security Council releasing frozen funds. The proposal is currently in the community feedback phase and is expected to move to a Snapshot vote.