Kelp and Aave have burned the exploiters rsETH on Arbitrum, which was seized during the controlled liquidation of the attacker's rsETH collateral positions on Aave. KelpDAO says the 117,132 rsETH deficit is being progressively refilled from Aave's Recovery Guardian and Kelp's Recovery Safe into the LayerZero OFT adapter on Ethereum mainnet.

Kelp expects to unpause rsETH withdrawals within 24 hours of the first tranche hitting the adapter, after which deposits, redemptions, bridging, and claims will resume as normal. The goal is to ensure rsETH remains fully backed across Ethereum and L2s. On the security side, Kelp has deprecated all L2-to-L2 routes as it migrates to Chainlink CCIP for cross-chain bridging.

Disclaimer: Content is for informational and educational purposes only and does not constitute financial, investment, legal, or other professional advice. No representations or warranties are made as to accuracy, completeness, or timeliness. Use of this content is at your own risk, and you should consult a qualified professional before making decisions. No fiduciary or advisory relationship is created

Aave Labs, KelpDAO, LayerZero, EtherFi, and Compound filed an amended Constitutional AIP seeking to update the execution path for the previously approved transfer of 30,765 ETH frozen by the Arbitrum Security Council following the April 18 rsETH exploit. The amendment comes after a May 8th court order, which authorized the onchain transfer but required the ETH to move to a wallet controlled by Aave LLC rather than the originally proposed 3-of-4 Gnosis Safe.

The amendment only changes the recipient address and custody mechanics. The recovery objective remains the same: restoring rsETH's backing within the Kelp protocol. Aave LLC will need to hold the ETH under the terms of the restraining notice from Kim v. DPRK and cannot use the funds until the court rules further. Arbitrum delegates can now vote on the amended proposal onchain.

Disclaimer: Content is for informational and educational purposes only and does not constitute financial, investment, legal, or other professional advice. No representations or warranties are made as to accuracy, completeness, or timeliness. Use of this content is at your own risk, and you should consult a qualified professional before making decisions. No fiduciary or advisory relationship is created.

DeFi United is a coordinated relief initiative led by Aave service providers to fully restore the backing of KelpDAO's rsETH liquid restaking token following the April 18, 2026 LayerZero bridge exploit. The effort spans token contributions from major Ethereum protocols and foundations, frozen-fund releases coordinated through L2 governance and the courts, and a multi-step technical plan to clear bad debt across Aave and Compound.

The recovery has now been executed in full: rsETH is fully backed, withdrawals have reopened, and Aave's affected WETH markets have been restored to standard parameters. This page summarizes the complete timeline.

On April 18, 2026, at approximately 17:35 UTC, an attacker released 116,500 rsETH from KelpDAO's bridge contract on Ethereum mainnet without a corresponding burn on L2. The amount represented roughly 18% of the rsETH circulating supply and was valued at approximately $290 million at the time of the exploit. The attacker exploited a single point of failure in KelpDAO's 1-of-1 Decentralized Verifier Network (DVN), in which LayerZero Labs' DVN acted as the sole verifier.

The funds were distributed across multiple wallets and used as collateral on Aave V3, Compound V3, and Euler, allowing the attacker to borrow an estimated $236 million in WETH. Aave's bad debt exposure across deployments was estimated to potentially exceed $170 million.

LayerZero Labs initially attributed the attack to North Korea's Lazarus Group, identifying it as an RPC-poisoning attack against the DVN's verification path.

Aave froze its ETH and LST markets to contain bad debt accrual and prevent further withdrawals against compromised collateral. To give stranded aWETH lenders an exit, Fluid launched an aWETH redemption protocol and shortly after extended it to L2.

On April 21, the Arbitrum Security Council froze 30,765.67 ETH connected to the exploiter on Arbitrum One. Of the moved funds, 75,700 ETH had already been swapped by the DPRK via THORChain before the freeze.

On April 24, Aave service providers launched DeFi United, a deficit relief initiative to cover the estimated 118,000 ETH shortfall in rsETH backing. Initial pledges came from across the Ethereum ecosystem:

• EtherFi: 5,000 ETH

• Lido: 2,500 ETH

• Golem: 1,000 ETH

• Stani Kulechov (personal): 5,000 ETH

• Mantle: a loan facility extended to the Aave DAO

Ethena, Ink Foundation, Tydro, and LayerZero also signaled participation without specifying initial amounts. Stani Kulechov publicly called on THORChain to contribute the roughly $450,000 in swap fees its protocol generated from the DPRK's exploit-related swaps.

On April 24, the Aave DAO formally offered to contribute 25,000 ETH to DeFi United, the single largest pledge to the initiative. Hours later, the Ethereum Foundation swapped aWETH for wstETH, a market-supportive position rather than a direct contribution but one that signaled foundational alignment with the recovery.

By April 27, Aave founder Stani Kulechov confirmed that DeFi United had secured sufficient funds to fully restore rsETH's backing, with execution pending governance approvals and finalization of indicative agreements. Consensys and Joseph Lubin committed 30,000 ETH to the initiative the same day, and LayerZero formally contributed 5,000 ETH on April 28.

On April 28, Aave published the technical implementation plan for the recovery. The plan has two parallel tracks.

First, ETH commitments are converted to rsETH in tranches and deposited into the bridge lockbox, allowing rsETH to return to its nominal 1.07 ETH exchange ratio and the bridge to resume operations.

Second, governance proposals on Ethereum and Arbitrum will temporarily adjust rsETH's oracle price to enable controlled liquidations of the 107,000 rsETH still held as collateral by exploiter addresses across Aave and Compound. The recovered rsETH is then redeemed for ETH through Kelp and used to clear the deficits on both networks. Once the recovery completes, all temporary configuration changes are reverted and frozen markets are unfrozen, allowing lenders to withdraw.

Aave noted that successful execution relies on the attacker not interfering with the liquidation sequence.

On May 2, Aave executed the controlled liquidation step, seizing approximately 89,567 rsETH from the attacker's positions across Ethereum mainnet and Arbitrum V3 markets via the temporary oracle adjustment described in the implementation plan.

On May 4, ArbitrumDAO voted 90.96% in favor of routing the 30,765.67 ETH frozen on Arbitrum One to the DeFi United recovery multisig. Mantle DAO followed on May 5 by authorizing its treasury to lend up to 30,000 ETH to the Aave DAO to help cover bad debt from the exploit.

On May 8, a court signed an order clearing ArbitrumDAO to transfer the frozen 30,765 ETH to Aave LLC. Aave subsequently amended the Constitutional AIP to route the funds to a wallet controlled by Aave LLC, replacing the original 3-of-4 Gnosis Safe structure to comply with the court order.

On May 12, the final stage of the recovery began as Kelp and Aave burned the seized rsETH on Arbitrum, refilling the 117,132 rsETH deficit and preparing withdrawals to reopen.

On May 14, KelpDAO and Aave unpaused rsETH withdrawals, bridging, and claims, with rsETH confirmed as fully backed thanks to DeFi United funds. The same day, Aave restored LTV parameters across all V3 WETH deployments affected by the exploit, while KelpDAO consolidated bridging support and trimmed 20 chains.

On May 16, LayerZero Labs published its full post-mortem on the $292 million attack, tracing it to TraderTraitor, a compromised developer machine, and poisoned internal RPC nodes — confirming and expanding on the initial RPC-poisoning attribution.

The DeFi United recovery is complete. rsETH is fully backed at its nominal exchange ratio, withdrawals and bridging have reopened, and Aave's affected WETH markets are operating under standard parameters. The frozen 30,765 ETH on Arbitrum has been routed to Aave LLC per court order, the attacker's rsETH collateral has been liquidated and burned, and the LayerZero post-mortem has formalized the attack path.

For the full archive of DeFi United coverage, see the defi-united category.

Disclaimer: Content is for informational and educational purposes only and does not constitute financial, investment, legal, or other professional advice. No representations or warranties are made as to accuracy, completeness, or timeliness. Use of this content is at your own risk, and you should consult a qualified professional before making decisions. No fiduciary or advisory relationship is created