Crypto Coalition Unveils Plan to Mitigate $300 Million Token Exploit Impact on Aave Users

The unprecedented $300 million exploit has prompted a concerted effort to devise a rescue strategy. DeFi United, a coalition comprising multiple blockchain projects and crypto ecosystem stakeholders, has outlined a meticulous, step-by-step proposal to rectify the damage caused by the Kelp DAO hack. The plan, shared on Aave's official X account, details a coordinated approach to utilize Aave's infrastructure and restore stability to the markets. The exploit, which occurred on April 18, involved an attacker exploiting a vulnerability in rsETH's bridge, resulting in the release of 116,500 rsETH tokens without proper backing. These tokens were subsequently dispersed across multiple wallets and utilized as collateral on various lending platforms, including Aave. The proposal acknowledges that most of the exploited funds remain active, with approximately 107,000 rsETH tied up in positions across Aave and Compound. To address this, DeFi United's plan aims to simultaneously restore the backing of rsETH and unwind the loans created using the exploited tokens. The coalition claims to have secured sufficient ETH commitments to fully re-collateralize rsETH, which will be fed back into the system in stages. Meanwhile, the plan involves carefully unwinding the damaged lending positions, including those opened by the attacker on Aave. By temporarily adjusting the valuation of rsETH within the system, these positions can be liquidated or closed more smoothly, enabling the recovery of underlying assets like ETH. The proposal estimates that this could free up around 13,000 ETH from Aave alone. Once the collateral is recovered, it will be converted into ETH to cover the shortfall created by the exploit. While the process carries risks, including the need for governance approvals and successful fund deployment, the plan represents a more coordinated response than DeFi has often achieved in the past. If executed successfully, the ultimate goal is to fully restore the backing of rsETH and stabilize all affected markets.