United States District Judge Margaret M. Garnett signed a court order to allow an onchain governance vote to transfer the 30,765 frozen ETH from the ArbitrumDAO to a wallet controlled by Aave LLC. The order provides explicit legal cover for ArbitrumDAO participants: any party initiating, voting on, or participating in the onchain transfer to Aave LLC is not in violation of the restraining notice served by Gerstein Harrow LLP on May 1st.

The restraining notice transfers with the assets. Aave LLC has agreed to abide by the terms of the restraining notice as if it had been issued directly to Aave LLC, until the court vacates it, the plaintiffs withdraw it, or it expires by operation of law. The judge did not rule on whether the plaintiffs actually have a valid legal claim to the funds. The order helps move the DeFi United recovery effort forward towards restoring the backing of rsETH.

The ruling clears the legal path for the transfer authorized by ArbitrumDAO's recovery vote. The approval of the Mantle DAO loan to Aave and Aave's earlier liquidation of attacker rsETH positions brings DeFi United one phase closer to completion.

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KelpDAO announced it is migrating rsETH from LayerZero to Chainlink's Cross-Chain Interoperability Protocol (CCIP) following the April 18 exploit that resulted in over $300M in losses. KelpDAO says the exploit originated within LayerZero's own infrastructure, not a misconfiguration.

KelpDAO also pushed back on LayerZero's public framing of the incident, arguing that the 1-1 DVN configuration was not unique to Kelp and was used by over 47% of LayerZero’s ecosystem at the time. Kelp also highlights that it detected the exploit itself and alerted LayerZero, rather than being warned by them.

LayerZero CEO Bryan Pellegrino responded to the claims, stating that KelpDAO started with a multiDVN setup of LayerZero Labs and Google, but later changed its configurations to the 1-1 DVN.

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 a multi-step technical plan to clear bad debt across Aave and Compound.

This page summarizes the full timeline and the mechanics of the recovery.

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 subsequently 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.

DeFi United has secured commitments exceeding the 118,000 ETH shortfall. Aave has submitted a governance proposal to the Arbitrum DAO requesting release of the 30,765.67 ETH into a 2-of-3 Gnosis Safe controlled by Aave Labs, KelpDAO, and Certora. The full AIP governance process is estimated to take approximately 49 days. Detailed next steps for affected users are expected to be released by Aave in the coming days.

This page will be updated as the recovery progresses. For the full archive of DeFi United coverage, see the defi-united category.

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