Aave Moves to Restore rsETH After Kelp DAO Exploit

• Arbitrum DAO members are now debating whether to unfreeze the ETH held by the DeFi United fund.
• Among the most catastrophic crypto breaches of 2026, the Kelp DAO attack sent shockwaves across the DeFi lending market.

Finally, Aave Labs has taken a step toward reestablishing rsETH backing and paying impacted users by liquidating the remaining rsETH assets on Ethereum and Arbitrum held by the Kelp DAO attacker.

According to X post, Aave announced this on Wednesday, calling it a “critical step” in the “DeFi United” recovery plan. Recovery Guardian, a multisignature wallet administered by DeFi United, received the liquidated collateral associated with the $293 million exploit that occurred on April 18, according to the statement.

Recovery Efforts Gain Momentum

According to Thaddeus Pinakiewicz, VP of research at Galaxy Digital, DeFi United is currently only around 10% short of the Ether (ETH) required to reinstate the Kelp DAO restaked ETH (rsETH) token. Among the most catastrophic crypto breaches of 2026, the Kelp DAO attack sent shockwaves across the DeFi lending market, destroying trust in the system and destroying billions of dollars’ worth of liquidity.

According to Aave, their insurance system, Umbrella, which offers automatic protection against bad debt, was not used, and customer funds were unaffected by the liquidations. On April 28, Aave said that 13,000 Ether, or around $30.2 million at today’s rates, will be released upon clearing up the hacker’s collateral on Arbitrum and Ethereum.

Still, as pointed out by Pinakiewicz, another 30,765 ETH have been frozen by Arbitrum DAO and are still in “legal limbo” due to a restraining notice that was issued on Friday by a US law firm, Gerstein Harrow LLP, which prohibits Arbitrum DAO from dispersing the frozen ETH. An emergency motion to remove the restraining notice was filed by Aave in response.

Arbitrum DAO members are now debating whether to unfreeze the ETH held by the DeFi United fund; the idea has received support from more than 90% of voters. The voting period will end on Friday.

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