KelpDAO announced on April 30 that it has completed its committed contribution of 2,000 ETH from its treasury to the DeFi United recovery plan, an Aave-led initiative designed to restore peg support for rsETH and bring the system back to normal operations. The move comes after an exploit on April 18 drained approximately $292 million from KelpDAO's LayerZero-powered bridge, severely disrupting rsETH's exchange rate.
“As part of that commitment, we are contributing 2,000 ETH from our treasury directly to DeFi United,” KelpDAO stated. The protocol emphasized that its internal commitment before any public announcement was that “rsETH holders will not be abandoned,” and that this contribution is a direct manifestation of that pledge.
Exploit Details and Bad Debt Scale
The April 18 attack siphoned 116,500 rsETH (worth roughly $290 million to $293 million) from KelpDAO's LayerZero bridge, representing about 18% of rsETH's total supply. The attacker then used those tokens as collateral across Aave, Compound v3, and Euler to borrow an estimated $236 million in ETH and WETH, leaving the protocols with significant bad debt. The incident highlighted the fragile balance between capital efficiency and security in cross-chain infrastructure.
Multi-Protocol Rescue Effort Exceeds $300 Million
DeFi United, in collaboration with Mantle, Consensys, Arbitrum, Lido Finance, and LayerZero, has mapped out a recovery path that includes recapitalizing the bridging treasury, restoring oracle functionality, and closing funding gaps in affected markets. The coalition has tentatively raised more than $302 million, with most contributions coming from DAOs and crypto businesses.
Key contributors include: Consensys and Joseph Lubin at 30,000 ETH (~$69 million); Mantle with 30,000 ETH as a low-interest loan; Aave DAO pending a governance vote for 25,000 ETH (~$57.5 million); and LayerZero with 10,000 ETH (~$23 million). Additionally, the Arbitrum Security Council froze 30,766 ETH (~$71 million) in attacker-controlled funds, pending a governance decision on their allocation.
KelpDAO stated that its investment helps accelerate the overall repair process and that as funds from various parties gradually come online, collateral support for rsETH will return to normal. The protocol committed to continuing community updates as the recovery progresses.