A coalition of DeFi protocols led by Aave is mounting a coordinated recovery effort called “DeFi United” to address bad debt from the April 18 KelpDAO exploit. The hack, which drained approximately $292 million, left a shortfall of up to $230 million on Aave, prompting a multi-party response. Aave founder Stani Kulechov personally pledged 5,000 ETH, while other major contributors like Mantle and Lido have proposed significant financial support.
Aave and a coalition of DeFi protocols are mobilizing a coordinated recovery effort, branded “DeFi United”, to absorb bad debt stemming from the April 18 exploit that drained approximately $292 million from KelpDAO’s cross-chain bridge. The incident left the sector’s largest lending protocol grappling with an estimated shortfall between $123.7 million and $230.1 million.
Aave founder Stani Kulechov kicked off the push with a personal pledge of 5,000 ETH. “Aave is my life’s work and we’re working nonstop to find the best possible outcome for users,” he stated.
Ethereum layer-2 scaling solution Mantle‘s core team has drafted a proposal, MIP-34, for a credit facility of up to 30,000 ETH to support Aave DAO. Crypto exchange Bybit, as Mantle‘s biggest stakeholder, confirmed it will vote yes on the proposal.
Liquid staking protocol Lido Finance‘s contributors have proposed a one-time contribution of up to 2,500 stETH, conditioned on the relief vehicle being fully funded. Other confirmed participants include the Golem Foundation, Ether.fi, Tydro, Ethena, Frax Finance, and LayerZero, which published a recovery framework proposal.
The KelpDAO exploit was attributed to North Korean hackers who exploited a configuration vulnerability. Attackers minted 116,500 unbacked rsETH and used it as collateral on Aave to borrow roughly $190 million in legitimate assets.
The resulting liquidity crunch triggered more than $10 billion in net withdrawals from Aave. The Arbitrum Security Council later froze 30,766 ETH worth approximately $71.5 million linked to the exploiter following law enforcement input.
Industry experts provided mixed reactions to the coordinated effort. Matthew Pinnock, COO at Altura DeFi, said the effort signals the ecosystem is “moving beyond isolated protocols to a more coordinated financial system.”
Georgii Verbitskii, founder of yield platform TYMIO, noted that “without clarity on what it will actually involve, it’s difficult to expect any meaningful structural shift in DeFi.” Conversely, Sergey Kravtsov, CEO of Papaya Finance, described the effort as “an emergent immune response of a financial system that is actually decentralized.”
