DeFi United Secures $160M as Industry Moves to Cover Aave Bad Debt Crisis

It has been reported that **A coordinated decentralized finance (DeFi) relief effort, which was reportedly raised $160 million to pay off bad debt created when attackers took advantage of KelpDAO’s bridge and unbacked collateral into Aave V3 markets on April 18, 2026. ** **

Key Takeaways:

The April 18 Kelp DAO exploit produced up to $230, and in hours of this exploitation, * Aave froze rsETH reserves were discovered. A bad debt 1 million in a bad loan for .

• DeFi United raised $160M by April 25, with Mantle and Aave DAO pledging 55,000

$ETH

combined.

• Governance votes on Aave DAO’s 25,000

$ETH

contribution are ongoing as the protocol works to fully restore rsETH backing.

DeFi United Raises $160M to Backstop Aave

The hack started with 1735 UTC at Ethereum block 24,908,285, and the exploit was initiated at 17. Kelp DAO’s layerzero V2 bridge was a 1-of-1 DVN on the Unichain-to-Ethereum rsETH route, which was targeted by attackers as he used to attack attacks with no additional verifiers. A forged inbound packet, which issued them with the unbacked rsETH token of 116,500 (about $292 million at the time) wasminted by they submitted a “noticed lock or burn” on the source chain that had no effect on their original currency.

Attacker was quick to move, . About $221 million, about 89,567 rsETH was collateralized across Aave V3 markets on Ethereum and Arbitrum. A. total of around $191 million, and smaller amounts of wstETH (along with roughly 82,650 WETH) were then borrowed by the attacker as well as some small sums of an estimated $11mn worth of money from it.

Health reasons remained for the posts from 1 to 1 with health factors left behind. 00 and 1 Full repayment unlikely, with full repayment – 03. The smart contracts of Aave‘s were not exploited by Aarve•. This debt was created entirely from the unbacked external collateral, which led to the bad debt.

In hours Aave’s Protocol Guardian responded to the question – which is . A total of rsETH and wr.ETH reserves in V3 deployments were frozen by about 1900 UTC on April 18, loan-to-value ratios had been zero, interest rates models changed to cope with liquidity pressure; all aforementioned reserve reserves were also frozen at the time (by March 18) OCT 18.

An official event was reported on April 20 by Aave Labs and risk manager Llamarisk. According to the report, two loss scenarios were modeled by modelling of how Kelp DAO socializes the shortfall. The first case is that an rsETH-holder with the same haircut, which has about $123 per cent of its value. Aave 7m shit debt on Aamve for . In the second, L2 rsETH holders’ losses to L2, respectively, lead to about $230. A total of 1 million in bad debt, Mantle and Arbitrum being the most heaviest exposure to one million. Other estimates placed Aave’s total exposure between $196million and $200 million.

Market response to was sharp. In the days after Aave’s value locked was $6 billion to $9 billion, a total value of Aavesaves had declined. The immediate aftermath of AAVE saw its price drop from 10% to 22%. In some reports, losses of Broader DeFi TVL were more than $13 billion.

Aave service providers began launching DeFi United, a multi-protocol relief fund that funds donations to defiunited victims in an attempt to contain the fallout. Eth, Ethereum address 0x0fCa5194bAA5969baA632a835031d9C4A25970effE68 Depending on recoveries and final bad debt figures, the fund targets the shortfall of rsETH (first model at 68,900 to over 100,000 $ETH) that is targeted by the funds.

DeFi United had raised $160 million on Saturday, Arkham Intelligence confirmed that DeF United was raising $160,000 million. Mantle, along with Aave DAO, contributed 55,000 $ETH (about $127 million) of that sum. Mantle also offered up to 30,000 $ETH as a three-year credit facility at Lido staking yield plus 1%. The treasury has proposed Aave DAO’s proposal for 25,000 $ETH from its TREason, with governance voting still in progress.

Stani Kulechov, founder and CEO of Aave, 5,000 $ETH from personal funds. Ethher, meanwhile, is an Ether . Fi offered to pay 5,000 $ETH in exchange for the phraser. As a result, Lido DAO offered up to 2,500 stETH as well as . Other smaller donors include Golem Foundation at 1,000 $ETH, Aave VP Emilio Frangella at 500 $TH and community donations of over 272 $ Ethereum reported onchain. In addition, support for Ethena, Layerzero, Ink Foundation, Frax and TydrO also came from Ethea.

Several of the attacker funds were frozen by the Arbitrum Security Council, which reduced the net gap the fund must have to cover. After 40,000-rsETH, Kelp reversed and recovered a follow-on malicious packet for 50,000 r.ETH before it could be processed.

In DeFi history, participants describe the effort by DeFI United as one of the largest coordinated recovery efforts in DeF history. pending donations, governance votes on upcoming contributions remain active; as the protocol continues to restore full rsETH support and clear remaining bad debt, the fund still accepts donations.

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