DeFi United Relief Vehicle For rsETH
Aave service providers pledge 13,500+ ETH toward covering rsETH's 118,000 ETH shortfall from the KelpDAO exploit.
Aave service providers have launched a deficit relief initiative called DeFi United, designed to fully cover the underbacked rsETH liquid staking token from KelpDAO. The initiative includes contribution pledges from several ecosystem projects: EtherFi has committed 5,000 ETH, Lido 2,500 ETH, and Golem 1,000 ETH.
Aave founder Stani Kulechov also personally pledged 5,000 ETH (approximately $11.6 million), emphasizing that Aave represents his life's work. Additional participants, including Ethena, Ink Foundation, Tydro, and LayerZero, have announced participation, though have not specified their contribution amounts.
The rsETH asset is facing an estimated shortfall of 118,000 ETH following the KelpDAO exploit executed by the DPRK. Arbitrum also recovered 30,000 ETH connected to the exploit, which could be directed toward DeFi United. 75,700 ETH has already been swapped by the DPRK via THORChain. Kulechov called for THORChain to contribute the roughly $450,000 in swap fees generated from those transactions to support DeFi United.
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Lido DAO has introduced a governance proposal to allocate 2,500 stETH to a relief fund aimed at fully covering the rsETH shortfall stemming from the KelpDAO LayerZero exploit. According to Lido, the initiative is being led by Aave service providers and will include contributions from other ecosystem participants.
Lido's EarnETH vault has direct exposure to rsETH, and if the deficit is not resolved, depositors are expected to face an estimated 9% loss, which would need to be covered in part by Lido's first-loss protection program. If the proposal passes, Lido DAO will transfer the 2,500 stETH to the Aave-led relief vehicle.
Lido also warned that the prolonged deficit could drive positions into forced deleveraging or liquidation. Borrowers on Aave are currently paying elevated borrowing costs amid peaking utilization rates.
Disclosure: Lido is a current sponsor of ETH Daily.
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Disclaimer: Content is for informational purposes only, not endorsement or investment advice. The accuracy of information is not guaranteed.
Fluid Extends aWETH Redemption Protocol To L2
Aave users on Arbitrum and Base can now swap their frozen aWETH collateral for wstETH or weETH.
Fluid extended its aWETH Redemption Protocol to L2 networks, launching first on Arbitrum and Base. The solution allows Aave users to swap their frozen aWETH collateral for wstETH or weETH, for a fee of roughly 2%. On Ethereum mainnet alone, the protocol has already facilitated $400 million in aWETH redemptions.
The service helps protocols unwind looped Aave positions more efficiently. It works by pairing protocols running looping strategies with WETH lenders on Aave. Initial liquidity was absorbed within hours of launch, and the pool is expected to be replenished. EtherFi also launched an aWETH redemption tool for Ethereum mainnet.
EarnUSD is a stablecoin vault by Lido for earning transparent, onchain USD-denominated rewards. Get started today at stake.lido.fi/earn
Disclaimer: Content is for informational purposes only, not endorsement or investment advice. The accuracy of information is not guaranteed.