Crypto Coalition Unveils Plan to Recover from $300 Million Aave Token Exploit

The recovery effort for the recent $300 million Kelp DAO hack is underway, with DeFi United spearheading the initiative to restore the backing of rsETH. A comprehensive plan has been outlined to address the damage caused by the exploit, which saw over 116,000 unaccounted tokens released into the market. The proposal, which utilizes Aave's infrastructure, aims to unwind the damage and stabilize the markets. The hack, which occurred on April 18, involved an attacker exploiting a vulnerability in rsETH's bridge, resulting in the creation of a large batch of rsETH without backing. These tokens were then deployed across DeFi, with a significant portion used as collateral on Aave and other lending platforms, causing a systemic problem. The proposal seeks to tackle two main issues: restoring the backing of rsETH and unwinding the loans created using the exploited tokens. DeFi United has secured enough ETH commitments to fully re-collateralize rsETH and plans to feed this ETH back into the system in stages. The plan also involves carefully unwinding the mess in the lending markets, including dealing with positions opened by the attacker on Aave. By temporarily adjusting the valuation of rsETH, the proposal suggests that these bad positions can be liquidated or closed more smoothly, allowing for the recovery of underlying assets. The process is not without risk, but if executed successfully, the goal is to fully restore the backing of rsETH and stabilize the affected markets.