Aave Plans ₱15.17 billion ($246 million) Recovery After Kelp Hack
Aave Labs and DeFi United secured Ether commitments to clear ₱15.17 billion ($246 million) in bad debt across Aave and Compound without spreading losses to users after the April 18 Kelp DAO hack.
Key Takeaway
DeFi's first major coordinated recovery shows protocols can rescue bad debt without dumping losses on users.
Aave Labs CEO Stani Kulechov said the organization and DeFi United plan to start executing the rsETH recovery in the coming days.
North Korean hackers tricked Kelp DAO into releasing unbacked rsETH tokens on April 18, which they deposited as collateral on Aave and Compound before borrowing large amounts of Ether. DeFi United published a technical implementation plan Tuesday showing how the coalition secured sufficient Ether commitments to restore full backing. The group will convert committed Ether into rsETH in multiple tranches, then clear the hacker's positions through controlled liquidations.
The recovery method requires temporarily lowering the oracle price of rsETH through governance votes to enable liquidations. Aave warned that deliberate interference by the attacker could result in incomplete deficit accrual, requiring additional liquidation steps to fully resolve the positions.
The plan aims to restore rsETH backing without socializing losses among the protocol's users. Recovery requires governance proposals on both Ethereum and Arbitrum, the layer 2 network where hackers sent some of the ₱18.07 billion ($293 million) stolen from Kelp DAO.
This article was written based on reporting from Dlnews.
