Key Highlights
- Compound DAO has proposed up to 3,000 ETH for DeFi United but ties funding to strict conditions and governance approval amid rsETH recovery efforts.
- The proposal demands full collateral restoration and fair treatment before releasing funds, keeping flexibility to reduce or withdraw support.
- Industry backing grows as Avalanche, Consensys, Renzo and others commit capital, showing coordinated action to stabilize DeFi liquidity.
Compound DAO has put forward a governance proposal to contribute between 1,900 ETG and 3,000 ETH to the DeFi United effort to help fix the rsETH shortfall. At an ETH price of $2,300, the contribution could range from approximately $4.37 million to $6.9 million. The move comes as several major protocols step in to contain the impact of a recent disruption that raised concerns about liquidity across DeFi.
The proposal is seeking approval in principle from the Compound DAO, with the final contribution amount to be determined by an executing group compromising the Compound Governance Working Group (CGWG), Gauntlet, the Security Service Providers (SSPs), and the Compound Foundation. That group will review market conditions, recovery progress, and confirmed participation by other protocols before making a final call.
Compound’s own direct exposure to the rsETH incident is described in the proposal as expected to be limited—meaning this contribution is framed primarily as a systemic stability measure and a show of cross-protocol solidarity rather than loss mitigation.
Conditions Shape Contribution Decision
Compound has attached strict conditions to its possible contribution, signaling caution even as other protocols support the recovery effort.
Funds will only be released if rsETH collateral is fully restored. The proposal also requires that the recovery process treat all affected parties equally, without giving any group an advantage.
The proposal also requires a clear execution plan and transparent governance updates. A separate execution group, made up of governance members, risk teams and service providers, will decide the final amount. They will review market conditions, progress on the recovery, and how many other protocols take part before making a final call.
The DAO also retained flexibility to scale back or withdraw support entirely if those conditions are not met. Notably, approximately 1,857 ETH of the proposed contribution could be satisfied through recovery of the attacker’s position, contingent on rsETH backing being restored. If that recovery does not materialize, this portion will not be deployed. As a result, the actual contribution may fall well below the 3,000 ETH upper limit.
The execution group is required to publicly disclose the final contribution amount along with a concise explanation of how each condition was assessed.
DeFi united gains broad industry support
Support for the DeFi United recovery effort continues to expand, with several major ecosystem players committing capital and signaling coordination across protocols. The Avalanche Foundation backed the initiative, stating, “We stand behind @Aave and the broader DeFi ecosystem. DeFi United,” and described the episode as a real-time stress test for decentralized finance.
Renzo has deployed more than $10 million into Aave V3 markets to support liquidity, while Consensys and Joseph Lubin have pledged up to 30,000 ETH toward the recovery. Aave DAO itself has proposed a 25,000 ETH contribution, while Aave founder Stani Kulechov has personally committed 5,000 ETH. Mantle has proposed a 30,000 ETH credit facility, and Lido has put forward a proposal to contribute up to 2,500 stETH.
In a separate but related development, the Arbitrum Security Council froze 30,765.67 ETH — approximately $71 million — linked to the attacker’s wallets. Aave Labs, alongside KelpDAO, LayerZero, EtherFi, and Compound, has submitted a governance proposal to Arbitrum DAO requesting those funds be released into the DeFi United recovery multisig, which is jointly controlled by Aave, KelpDAO, and blockchain security firm Certora.
Another layer of backing comes from all sectors of the ecosystem. Circle is amassing AAVE tokens, and other players continue to pump funds into the project. The efforts highlight a concerted effort to stabilize the markets amid the disruption.
The growing list of contributors points to increasing alignment among protocols seeking to contain broader market impact and restore rsETH backing as quickly as possible.
Also Read: DeFi United Targets $71M Recovery From Aave in rsETH Backing Plan
