Aave DAO Asked to Commit 25,000 ETH to Industry-Wide rsETH Recovery Fund – Crypto News – Crypto News
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Aave DAO Asked to Commit 25,000 ETH to Industry-Wide rsETH Recovery Fund – Crypto News

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The Aave DAO is voting on a proposal to provide funding to restore Kelp DAO’s rsETH product backing after an April 18 bridge incident, as part of a broader DeFi United ecosystem recovery effort.

Aave’s decentralized governance body is being asked to contribute 25,000 ETH from its treasury to a coordinated recovery effort following the April 18 exploit of Kelp DAO’s rsETH bridge, according to a proposal published Thursday by Aave service provider TokenLogic.

The contribution would make Aave the largest single donor to a coalition called “DeFi United,” which also includes EtherFi, Lido, Ethena, Mantle, Ink Foundation, BGD Labs, and several individual contributors. Together, the group is working to restore the full backing of rsETH and protect users across affected Aave V3 markets.

The April 18 attack drained 152,577 rsETH from Kelp’s LayerZero bridge adapter, creating an original shortfall of approximately 163,183 ETH. Subsequent recoveries have reduced that figure: Kelp froze tokens worth roughly 43,168 ETH, the Arbitrum Security Council froze 30,766 ETH held by the attacker, and liquidations of the hacker’s positions on Aave and Compound are expected to recover an additional 14,168 ETH. The residual funding gap currently stands at approximately 75,081 ETH.

To close that gap, the proposal outlines a funding stack combining public donations totaling 14,570 ETH, a 30,000 ETH credit facility from Mantle, and the requested 25,000 ETH from the Aave DAO treasury.

Executing the recovery requires placing the full 120,015 ETH into the LayerZero lockbox upfront. Because several recovery streams are not yet liquid, short-term bridge loans are being arranged separately to cover the timing gap.

The proposal also authorizes Aave Labs to pledge DAO assets and future protocol revenue as collateral to secure funding arrangements. The proposal notes the plan depends on external actions including Kelp reopening withdrawals, LayerZero reopening its bridge, and the Arbitrum Security Council releasing frozen funds.

The proposal is currently in the community feedback stage before proceeding to 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.

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