Aave rallies DeFi partners to contain fallout from $292 million KelpDAO hack
Industry players are coordinating a recovery effort as the year’s biggest crypto rattled Aave, with Lido and EtherFi being firsts to offer aid.
What to know:
- Aave and partners are coordinating major recovery effort across DeFi to cover a shortfall and prevent bad debt after the $292 million exploit tied to KelpDAO.
- Lido Finance, EtherFi and Aave founder Stani Kulechov among those who proposed ether (ETH) to cover the hole.
- The initiative comes after an attacker created unbacked rsETH tokens and used them to borrow ether from Aave, leaving the protocol with impaired collateral and triggering a withdrawal wave.
Aave said in a post on X that multiple participants have already made indicative commitments to support the effort.
The first among them was staking provider Lido Finance, whose ecosystem contributor Lido Labs Foundation put forward a proposal to allocate up to 2,500 stETH, worth roughly $5.7 million at current prices, into a dedicated relief vehicle.
The funds would be used to reduce the shortfall in rsETH backing and help prevent forced liquidations across lending markets.
That was followed by EtherFi proposing a 5,000 ETH plan to “protect users and prevent bad debt” across DeFi.
Stani Kulechov, founder of Aave, said he’s “personally” contributing 5,000 ETH.
“Aave is my life’s work and we’re working nonstop to find the best possible outcome for users,” he said in an X post. “I’m working to see this resolved and market conditions normalized as soon as possible.”
