Crypto Coalition Unveils Plan to Mitigate Aave Token Exploit

A $300 million shortfall has prompted a coalition of blockchain projects and crypto ecosystem players to devise a step-by-step recovery plan. DeFi United's proposal outlines a coordinated effort to restore rsETH's backing and unwind the damage caused by the Kelp DAO hack, which released over 116,000 unaccounted-for tokens. The plan relies heavily on Aave's infrastructure to rectify the situation and stabilize markets. The hack, which occurred on April 18, exploited a vulnerability in rsETH's bridge, resulting in the creation of 116,500 rsETH tokens without backing. These tokens were then dispersed across multiple wallets and deployed in DeFi, with a significant portion used as collateral on Aave and other lending platforms. DeFi United's proposal aims to address the dual issues of restoring rsETH's backing and unwinding the loans created using the exploited tokens. The plan involves lining up sufficient ETH commitments to re-collateralize rsETH and feeding it back into the system in stages. Concurrently, the proposal seeks to carefully unwind the lending market mess by temporarily adjusting rsETH's valuation, enabling the closure of bad positions and the recovery of underlying assets. The process is contingent upon governance approvals, successful fund deployment, and smooth execution. If successful, the plan aims to fully restore rsETH's backing and stabilize affected markets.