Aave DAO Weighs 25,000 ETH Pledge to rsETH Recovery Fund After Kelp Bridge Exploit
Aave's governance community is considering a proposal to allocate 25,000 ETH from the DAO treasury to a joint recovery program formed after the April 18 exploit of Kelp DAO's rsETH bridge. The proposal, published Thursday by Aave service provider TokenLogic, would make Aave the largest single contributor to "DeFi United," a coalition that includes EtherFi, Lido, Ethena, Mantle, Ink Foundation, BGD Labs, and individual backers.
The effort aims to re-establish full backing for rsETH and limit user impact across affected Aave V3 markets. The April 18 attack siphoned 152,577 rsETH via Kelp's LayerZero bridge adapter, creating an estimated initial deficit of about 163,183 ETH.
Recovery actions have narrowed the hole. Kelp froze assets valued at roughly 43,168 ETH, the Arbitrum Security Council froze 30,766 ETH linked to the attacker, and liquidations of the attacker's positions on Aave and Compound are expected to bring in another 14,168 ETH. The remaining shortfall is estimated at approximately 75,081 ETH.
To cover that gap, the plan proposes a combined funding package: 14,570 ETH in public donations, a 30,000 ETH credit facility from Mantle, and the 25,000 ETH contribution requested from the Aave DAO.
Implementation would require depositing the full 120,015 ETH into the LayerZero lockbox upfront. With parts of the recovery proceeds not yet liquid, separate short-term bridge loans are being arranged to manage timing mismatches. The proposal also seeks authorization for Aave Labs to pledge DAO assets and future protocol revenue as collateral for related financing.
The plan is contingent on external steps, including Kelp reopening withdrawals, LayerZero reopening its bridge, and the Arbitrum Security Council releasing frozen funds. The proposal is currently in the community feedback phase ahead of a Snapshot vote.
Sources: Aave Governance | Aave Twitter | DeFi United. This article was generated automatically by The Defiant's AI news system from publicly available sources.
