Aave-Led ‘DeFi United’ Relief Effort Raises $300 Million to Cover Kelp DAO Exploit Losses

A coordinated relief effort to raise money following this month’s $290 million Kelp DAO exploit crossed a critical threshold on Monday, receiving enough contributions to cover possibly the largest hack of the decentralized finance sector in recent history.

The organization called DeFi United, promoted by Aave founder and CEO Stani Kulechov, has raised 132,650 Ethereum (ETH), according to the organization. website. Since Ethereum recently changed hands around $2,300, the amount was estimated at around $303 million.

DeFi United plans to use the money to restore rsETH, a sign that Kelp attackers stole DAO and used it to borrow huge amounts of money from Aave on April 18. Since the unsecured funds were looted, Aave’s liquidity has come under pressure, damaging confidence in DeFi in general.

Contributions poured in last day. On Monday, Ethereum-focused development company Consensys said in an X after that it had contributed 30,000 ETH. The Avalanche Foundation now says this in an X after that it supported the effort. (Disclosure: Consensys is one of 22 investors in an editorially independent Declutter.)

While DeFi United has received enough contributions to wipe out the value of rsETH that attackers with ties to North Korea had looted, the total amount raised is subject to ongoing board votes among other DeFi projects like Mantle, Ether.Fiand Lido.

DeFi United’s website makes it clear that the relief effort is not guaranteed to be successful, underscoring how the plan relies on several moving parts, most notably the ability of token holders running various DeFi projects to rally around a common goal.

For example, the security council that oversees layer-2 Ethereum scaling network Arbitrum essentially froze 30,765 Ethereum that attackers had left exposed. A proposal to contribute the funds to DeFi United estimates that the process could take approximately 49 days.

Meanwhile, people are trying to alleviate the liquidity crisis for Aave in other ways. For example, Tron founder Justin Sun said in an X after Monday that Tron DAO and crypto exchange HTX delivered $20 million worth of Tether’s USDT stablecoin on Aave’s platform.

When Kelp DAO attackers borrowed money from Aave, they essentially exchanged rsETH for Ethereum, leaving depositors unable to withdraw funds. Many of those affected turned to stablecoins and borrowed the tokens as a way to get money out of the lending platform.

On Monday, the so-called occupancy rate for markets related to USDT and Circle’s USDC stablecoin hovered around 92%, according to Aavescan. After being around 100% for several days last week, the benchmark indicated that the liquidity crisis had subsided somewhat.