Aave service providers on Friday proposed moving 25,000 ETH from the DAO's treasury to a coordinated DeFi recovery initiative. The funds aim to close the remaining gap in rsETH backing after a April 18, 2026 exploit allowed an attacker to mint unbacked rsETH via a compromised LayerZero bridge and borrow assets on Aave.
Shortfall Size and Early Recoveries
The exploit released 152,577 rsETH from the LayerZero lockbox, creating an initial deficit of roughly 163,183 ETH, according to Aave. Swift countermeasures shrunk the hole: KelpDAO froze 40,373 rsETH (~43,168 ETH); the Arbitrum Security Council seized 30,766 ETH linked to the attacker. Aave liquidations could return up to 12,323 WETH, while Compound positions add another 1,845 WETH. Combined, these sources cover approximately 54% of the original shortfall.
Ecosystem Commitments and Credit Lines
As the gap narrowed, ecosystem players stepped in. Ether.fi pledged up to 5,000 ETH, Lido DAO committed 2,500 ETH, and Aave executives joined directly — Emilio Frangella contributed 500 ETH, founder Stani Kulechov committed 5,000 ETH. Mantle offered a 30,000 ETH credit facility. Including Golem, BGD Labs, and users, total pledges reached around 69,534 ETH. X user DCF GOD estimated that frozen funds and contributions could fully cover the deficit if approved, factoring in the ~30,700 ETH frozen on Arbitrum.
Aave's Fixed Allocation and Repayment Priority
The proposal sets Aave's contribution at a fixed 25,000 ETH. Any additional donations would repay Mantle's credit line rather than reduce the DAO's commitment, limiting long-term exposure to external borrowing.
Execution Hurdles and Timeline
Fund transfer depends on multiple external steps: Kelp must reopen withdrawals, and the LayerZero bridge needs restoration. Recovery could take weeks as assets become liquid.
Institutional Sentiment
JPMorgan analysts noted that repeated exploits continue to undermine institutional confidence in DeFi, with users shifting more funds into stablecoins after such incidents.