Crypto Coalition Unveils Plan to Mitigate Aave Token Exploit

In a bid to rectify the massive token exploit that has left Aave users reeling, DeFi United has put forth a detailed, step-by-step proposal to restore the backing of rsETH. The plan, which relies heavily on Aave's infrastructure, aims to unwind the damage caused by the Kelp DAO hack and stabilize the markets. The incident, which occurred on April 18, saw an attacker exploit a vulnerability in rsETH's bridge, resulting in the release of 116,500 rsETH tokens that weren't properly accounted for. These tokens were then spread across multiple wallets and deployed across DeFi, with a significant portion used as collateral on Aave and other lending platforms. DeFi United's proposal seeks to address the dual problems of restoring the actual backing of rsETH and unwinding the loans created using the exploited tokens. The group claims to have secured enough ETH commitments to fully re-collateralize rsETH and plans to feed this ETH back into the system in stages. Meanwhile, the proposal suggests carefully unwinding the mess in the lending markets by temporarily adjusting how rsETH is valued, enabling the bad positions to be liquidated or closed more smoothly. This, in turn, is expected to free up around 13,000 ETH from Aave alone, which can then be converted into ETH and used to cover the shortfall created by the exploit. While the process is not without risks, the plan represents a coordinated response to the crisis, with the ultimate goal of fully restoring rsETH backing and stabilizing the affected markets.