{"id":71670,"date":"2026-04-26T23:28:58","date_gmt":"2026-04-26T23:28:58","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/defi-united-secures-160m-as-industry-moves-to-cover-aave-bad-debt-crisis\/"},"modified":"2026-04-26T23:28:58","modified_gmt":"2026-04-26T23:28:58","slug":"defi-united-secures-160m-as-industry-moves-to-cover-aave-bad-debt-crisis","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/defi-united-secures-160m-as-industry-moves-to-cover-aave-bad-debt-crisis\/","title":{"rendered":"DeFi United Secures $160M as Industry Moves to Cover Aave Bad Debt Crisis"},"content":{"rendered":"<p><b>(Originally posted on : Bitcoin News )<\/b><br \/>\n<\/p>\n<div>\n<p><strong>Key Takeaways:<\/strong><\/p>\n<ul>\n<li>Aave froze rsETH reserves within hours of the April 18 Kelp <span>DAO<\/span> exploit, which created up to $230.1 million in bad debt.<\/li>\n<li> <span>DeFi<\/span> United raised $160M by April 25, with Mantle and Aave <span>DAO<\/span> pledging 55,000 <span>ETH<\/span> combined.<\/li>\n<li>Governance votes on Aave <span>DAO<\/span>\u2019s 25,000 <span>ETH<\/span> contribution are ongoing as the protocol works to fully restore rsETH backing.<\/li>\n<\/ul>\n<h2> <span>DeFi<\/span> United Raises $160M to Backstop Aave<\/h2>\n<p>The exploit began at 17:35 UTC, at <a href=\"https:\/\/news.bitcoin.com\/ethereum-explained-a-beginners-guide\/\">Ethereum<\/a> block 24,908,285. Attackers targeted Kelp <span>DAO<\/span>\u2019s <a href=\"https:\/\/news.bitcoin.com\/layerzero-claims-zero-contagion-after-290m-exploit-as-disputed-narratives-deepen-scrutiny\/\">Layerzero<\/a> V2 bridge on the Unichain-to-Ethereum rsETH route, which was configured as a 1-of-1 DVN with no additional verifiers. They submitted a forged inbound packet that minted 116,500 unbacked rsETH tokens, valued at roughly $292 million at the time, without a corresponding lock or burn on the source chain.<\/p>\n<p>The attacker moved quickly. About 89,567 rsETH, worth approximately $221 million, was deposited as collateral across Aave V3 markets on Ethereum and Arbitrum. The attacker then borrowed around 82,650 WETH, worth roughly $191 million, plus smaller amounts of wstETH.<\/p>\n<p>Positions were left with health factors between 1.01 and 1.03, making full repayment unlikely. <a href=\"https:\/\/news.bitcoin.com\/defi-lender-aave-battles-withdrawal-crisis-after-kelpdao-rseth-exploit\/\">Aave<\/a>\u2018s <span>smart contracts<\/span> were not exploited. The bad debt originated entirely from the unbacked external collateral.<\/p>\n<p>Aave\u2019s Protocol Guardian responded within hours. By approximately 19:00 UTC on April 18, all rsETH and wrsETH reserves across V3 deployments were frozen, loan-to-value ratios were set to zero, and interest rate models were adjusted to manage <span>liquidity<\/span> pressure.<\/p>\n<p>Aave Labs and risk manager Llamarisk <a href=\"https:\/\/news.bitcoin.com\/incident-report-llamarisk-aave-service-providers-detail-kelp-rseth-hack-across-ethereum-and-arbitrum-markets\/\">published<\/a> a formal incident report on April 20. The report modeled two loss scenarios depending on how Kelp <span>DAO<\/span> socializes the shortfall. In the first scenario, a uniform haircut across all rsETH holders produces approximately $123.7 million in bad debt on Aave. In the second, losses isolated to <span>L2<\/span> rsETH holders result in roughly $230.1 million in bad debt, with Mantle and Arbitrum bearing the heaviest exposure. Other estimates placed Aave\u2019s total exposure between $196 million and $200 million.<\/p>\n<p>The market responded sharply. Aave\u2019s total value locked fell between $6 billion and $9 billion in the days following the incident. The price of AAVE dropped between 10% and 22% in the immediate aftermath. Broader <span>DeFi<\/span> TVL losses exceeded $13 billion in some reports.<\/p>\n<p>To contain the fallout, Aave service providers launched <span>DeFi<\/span> United, a multi-protocol relief fund directing contributions to defiunited.eth, Ethereum address 0x0fCa5194baA59a362a835031d9C4A25970effE68. The fund targets the rsETH shortfall, initially modeled at 68,900 to over 100,000 <span>ETH<\/span>, depending on recoveries and final bad debt figures.<\/p>\n<p>On Saturday, Arkham Intelligence <a href=\"https:\/\/x.com\/arkham\/status\/2048107082646421695?s=20\" target=\"_blank\" rel=\"noopener noreferrer\">confirmed<\/a> <span>DeFi<\/span> United had raised $160 million. Mantle and Aave <span>DAO<\/span> together contributed 55,000 <span>ETH<\/span>, accounting for approximately $127 million of that total. Mantle proposed up to 30,000 <span>ETH<\/span> structured as a three-year credit facility at Lido <span>staking<\/span> yield plus 1%. Aave <span>DAO<\/span> has proposed 25,000 <span>ETH<\/span> from its treasury, with governance voting still in progress.<\/p>\n<p>Aave founder and CEO Stani Kulechov <a href=\"https:\/\/news.bitcoin.com\/stani-kulechov-5000-eth-defi-united-mantle-30000\/\">committed<\/a> 5,000 <span>ETH<\/span> from personal funds. Ether.fi pledged 5,000 <span>ETH<\/span>. Lido <span>DAO<\/span> offered up to 2,500 stETH. Smaller contributors include Golem Foundation at 1,000 <span>ETH<\/span>, Aave VP Emilio Frangella at 500 <a href=\"https:\/\/branch.wallet.bitcoin.com\/news-contextual-eth\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">ETH<\/a>, and community donations of more than 272 <a href=\"https:\/\/branch.wallet.bitcoin.com\/news-contextual-eth\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">ETH<\/a> reported onchain. Ethena, Layerzero, Ink Foundation, Frax, and Tydro also provided support.<\/p>\n<p>The Arbitrum Security Council <a href=\"https:\/\/news.bitcoin.com\/arbitrum-security-council-freezes-kelpdao-exploiter-eth\/\">froze<\/a> a portion of attacker funds, reducing the net gap the fund must cover. A follow-on malicious packet for 40,000 rsETH was reverted and recovered by Kelp before it could be processed.<\/p>\n<p> <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-is-defi-decentralized-finance\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">DeFi<\/a> United is described by participants as one of the largest coordinated recovery efforts in <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-is-defi-decentralized-finance\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">DeFi<\/a> history. Governance votes on pending contributions remain active, and the fund continues to accept donations as the protocol works toward restoring full rsETH backing and clearing remaining bad debt.<\/p>\n<\/div>\n<p><a href=\"https:\/\/news.bitcoin.com\/defi-united-secures-160m-as-industry-moves-to-cover-aave-bad-debt-crisis\/\">Source link <\/a><br \/>\n<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Originally posted on : Bitcoin News ) Key Takeaways: Aave froze rsETH reserves within hours of the April 18 Kelp DAO exploit, which created up to $230.1 million in bad debt. DeFi United raised $160M by April 25, with Mantle and Aave DAO pledging 55,000 ETH combined. Governance votes on Aave DAO\u2019s 25,000 ETH contribution [&hellip;]<\/p>\n","protected":false},"author":19,"featured_media":71671,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[32],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/71670"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=71670"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/71670\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/71671"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=71670"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=71670"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=71670"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}