NewsFlash Articles Data Fundraising Skill&API

rsETH Event Day 6: DeFi United Receives Around $100 Million Intention Commitment, but a Remaining Gap of $50 Million

Read this article in 15 Minutes

Aave led the establishment of the DeFi United mechanism, which focuses on cross-protocol joint rescue, with multiple protocols entering to participate in the rescue.

Original Title: "Day Six of the rsETH Incident, DeFi United Rescue Plan Receives Intention of $100 Million Commitment"
Original Author: ChandlerZ, Foresight News

Kelp DAO's rsETH LayerZero bridge was exploited on April 18th, with 116,500 rsETH (approximately $292 million) being minted without authorization. The attacker then borrowed around $190 million worth of assets on Aave V3, and the Arbitrum Security Council froze 30,766 ETH involved at the protocol level.

Following this, the DeFi United mechanism, led by Aave and focusing on cross-protocol collaborative rescue, was promptly established with the aim of covering the entire shortfall of 112,200 rsETH (approximately $258 million).

As of April 24th, several protocols have publicly declared their participation in DeFi United, with an aggregate commitment of around $100 million. However, most are still in the DAO voting, forum discussion, or earlier pre-discussion stages.

Contributors and Terms of Disclosed Amounts

The Golem Foundation and Golem Factory collectively transferred 1,000 ETH from their treasury (approximately $2.3 million) to aid in the recovery of rsETH collateral support and the orderly disposition of affected users. Golem stated that they have closely collaborated with the Aave team, emphasizing that this contribution is part of DeFi United's cross-protocol coordinated risk response.

Aave founder Stani Kulechov personally committed 5,000 ETH (around $11.5 million) to support DeFi United. Stani tweeted that Aave is his lifelong work, and the team is fully dedicated to finding the most beneficial solution for users. They are working with partners to secure further funding commitments. This personal contribution bypasses the DAO voting process and is a direct pledge.

The EtherFi Foundation authorized the deployment of up to 5,000 ETH (approximately $11.5 million) from the DAO treasury as EtherFi's share in the cross-protocol unified rescue to absorb user losses and prevent defaults in lending markets such as Aave.

The terms stipulate that the assistance will cease automatically upon completion, reaching the 5,000 ETH limit, or termination of subsequent governance voting. Any unused portion will be returned to the DAO treasury. If compensation is subsequently obtained through legal proceedings, insurance claims, or on-chain recovery, the refunded funds will be returned to the DAO within the committed amount range. The Foundation commits to releasing details of the rescue framework and allocation mechanism within seven days of the proposal's approval.

The Lido DAO proposal suggests allocating up to 2500 stETH (approximately $5.75 million) to a dedicated rescue vehicle, to be transferred through the Lido Labs Foundation-operated multisig bridge. This allocation will only be released if the rescue fund is substantially subscribed and sufficiently covers the rsETH shortfall in full.

Lido argues that if only a portion of the shortfall is covered, depositors in its EarnETH treasury would still face a maximum loss exposure of around 9000 ETH. Therefore, it rejects unilateral funding for partial rescue structures. The scope of the rescue vehicle's mandate is limited to addressing the rsETH shortfall itself and will not be used to support position health factors, second-order loss capital resets, or other second-order effects. This allocation is separate from the EGG 2026 budget, and any unused or reclaimed funds will be returned to the Lido Aragon Agent. The proposal has not yet entered the on-chain Aragon voting phase.

The Mantle proposal suggests that the Mantle Treasury provide a loan of up to 30,000 ETH (approximately $69 million) to the Aave DAO, with an interest rate of LIDO yield +1% APR, a maximum term of 36 months, and no prepayment penalties.

The terms require the Aave DAO to provide at least $11 million worth of AAVE tokens plus an additional 5% of protocol revenue as collateral. The funds will enter a first-priority multisig wallet controlled by Mantle, and 130,000 AAVE tokens will be delegated to Mantle for voting rights. Mantle positions this in the proposal as a fixed-income instrument for crisis period pricing and aims to drive Aave's native deployment on the Mantle network.

Several other protocols have publicly stated their intent to participate but have not disclosed amounts, including Ethena, LayerZero, INK Foundation, among others.

Aave's Own Funds Likely Covering Bad Debt Upper Limit

Based on current intent commitments and total shortfall calculations, there remains a deficiency of approximately $50 million for DeFi United. Even if external commitments remain at their current levels, the Aave protocol itself has sufficient buffers. The Aave treasury holds about $180 million in assets, and the Umbrella Security Module holds approximately $56 million in insurance funds, together totaling around $236 million, covering the upper limit of bad debt estimated by LlamaRisk at $123.7 million to $230.1 million.

Aave has partially unfrozen the previously emergency-frozen WETH market, and the initial $300 million lending run on the attack has largely subsided, with the AAVE token stabilizing after an initial over 25% pullback. From both a protocol self-rescue and market sentiment perspective, the event's systemic risk has moved beyond the most critical stage.

However, Spark's Strategy Lead monetsupply.eth criticized Aave's decision to unfreeze the Ethereum core WETH market, stating that the move was ill-considered and primarily benefited flash loan users. He pointed out that since Aave's Ethereum core borrowing rate is capped at 5.15%, and LST/LRT offers higher returns through discounts and collateral rewards, arbitrageurs can achieve approximately 45% annualized returns through up to 14x leveraged flash loans.

This strategy would result in the WETH market's utilization rate remaining at 100%, preventing regular aWETH holders from withdrawing collateral or refinancing their high-cost debt positions into other markets. He further questioned that the decision leaned more towards PR promotion rather than robust risk management, actually worsening the situation for regular users who have been trapped in the market for the past few days.

0xngmi Maps Out Three Scenarios: Stark Contrast in Aave's Default Scale

The actual default scale that Aave needs to absorb ultimately depends on KelpDAO's loss-sharing plan. DefiLlama founder 0xngmi has conducted a comprehensive digital deduction of three possible paths, each of which has a significant variance in its impact on Aave.

Path One: All rsETH holders suffer a proportionate loss. KelpDAO uniformly deducts 18.5% from all rsETH holders, a ratio that corresponds to the share held by 116,500 unauthorized minted rsETH tokens in total circulation. Aave currently has approximately 666,000 rsETH tokens as collateral, with positions on the mainnet and L2 mostly close to the maximum leverage (95% liquidation LTV).

Once the socialized loss is implemented, the 18.5% deduction far exceeds the 5% equity buffer of leveraged positions, leading to a complete wipeout of all position equities on the mainnet and L2, triggering massive liquidations. According to 0xngmi's calculation, the resulting accumulated defaults in Aave amount to approximately $216 million, representing 13.5% of the total collateral value.

The coverage structure for this default includes the Umbrella insurance module covering around $55 million, Aave's treasury subsidizing approximately $85 million, with an outstanding gap of about $76 million. KelpDAO can bridge this gap by borrowing or selling AAVE tokens held in Aave's treasury (currently valued at around $51 million). This scheme spreads the losses across all users, containing the impact on Aave's single market, but directly reducing the equity of rsETH holders.

Path Two: Abandon L2 Holders, Secure Mainnet Only. KelpDAO chooses to only compensate mainnet rsETH holders at face value, considering rsETH on L2 as a worthless asset. The scale of rsETH collateral on Aave's L2 is approximately $359 million (based on the current oracle's peg), and if all positions are at maximum leverage, the bad debt will directly inflate to $341 million.

In this scenario, the Umbrella Insurance Module cannot cover any L2 bad debt. Aave can only use the treasury or external borrowing to rescue part of the market. The markets of rsETH on the three chains with the highest losses, Arbitrum, Mantle, and Base, are most likely to be abandoned and collapse. This solution has a minimal direct impact on Aave's mainnet but severely damages the L2 ecosystem's reputation and may lead to a trust contraction in the entire L2 restaking space. For Mantle, in this scenario, its own L2 rsETH market would collapse directly, and the legitimacy of its 30,000 ETH loan proposal would also be backfired.

Path Three: Repay Only Original Holders Based on the Pre-Attack Snapshot. KelpDAO attempts to fully repay only the rsETH holders before the attack through a snapshot, with subsequent buyers or transferees bearing the loss themselves. In theory, this can minimize the loss to the smallest range, but actual execution is extremely complex: funds have flowed significantly between DeFi protocols post-attack, and the nature of lending and liquidity pools is that of a commingled pool of funds, making it impossible to truly distinguish between different batches of depositors.

In terms of specific bad debt calculation, the hacker borrowed $124 million on Aave's mainnet and $18 million on Arbitrum, totaling $142 million; after deducting the Umbrella coverage, there is still a net loss of approximately $91 million. This solution theoretically minimizes the loss, but is almost impossible to execute on a technical level and is equally likely to trigger long-term disputes at legal and community levels. 0xngmi judges its probability of implementation to be extremely low.

The net loss for Aave ranges from $76 million, $91 million to $341 million among the three paths, with KelpDAO's chosen solution determining whether Aave ultimately needs to use all of its treasury resources.

A rescue fund has been gathered around Aave, but the key switch to whether the solution can be implemented lies in KelpDAO's hands.

On April 23, in the afternoon, KelpDAO released a statement reiterating its core principle of always prioritizing users, stating that in the past four days, the team and partners have made substantial progress on multiple paths. The statement also publicly thanked the Arbitrum Security Council for the on-chain freeze and SEAL 911 for their early intervention investigation. KelpDAO did not disclose specific plans, timelines, or loss-sharing details, only committing to continue sharing specific updates through official channels.

The current DeFi United rescue plan is centered around Aave, with each protocol's intent commitment implying a baseline scenario of Path One. Once KelpDAO deviates to another path, the narrative of the 30,000 ETH loan from Mantle, the profit-sharing ratio between EtherFi and Lido, and the entire rescue framework will need to be recalculated.