In the wake of the April 18 Kelp DAO bridge exploit that created roughly $293 million in unbacked rsETH and triggered a major liquidity crunch on Aave, the DeFi community has rallied under a new coordinated initiative called “DeFi United.”
The coalition, initially formed by affected protocols and service providers, quickly expanded into a broader industry-wide movement aimed at containing contagion, restoring rsETH backing, and protecting users across lending markets. It has already secured hundreds of millions in commitments from major players, marking one of the fastest and most collaborative recovery efforts in DeFi history.
Aave Labs Founder and CEO Stani Kulechov described the past two weeks as “the hardest couple of weeks” he has experienced in over a decade of building in the space. In a detailed reflection posted today, Kulechov acknowledged the emotional toll of watching the incident — which occurred outside Aave’s own smart contracts — ripple through markets. Despite the setback, he expressed greater confidence in DeFi than ever before, citing the community’s willingness to help.
Recovery Efforts: DeFi United
“The issue was beyond Aave,” Kulechov wrote. “It was about restoring the whole state of DeFi, avoid contagion and ensuring that the whole ecosystem overcome this incident.
DeFi United started as a practical coordination effort among impacted protocols but evolved into a wider movement. The coalition has released a detailed technical plan to restore full backing for rsETH through staged ETH contributions converted into the token, alongside governance-approved liquidations to recover funds from attacker positions on Aave and other platforms. As of April 28–29, the effort has gathered over $300 million in pledges (roughly 130,000+ ETH), including significant contributions from Lido, Ether.fi, Consensys, Mantle, LayerZero, and personal commitments from Kulechov himself.
Kulechov expressed hope that it becomes “a permanent movement in some shape or form” to continuously support the industry from unexpected events. He also gave special recognition to several individuals and teams who stepped up during the crisis:
- Mike Silagadze (Ether.fi co-founder) — praised for going “above and beyond” despite no direct responsibility.
- Lido Finance team — credited for deep care and proactive support.
- @gdog97_ (associated with Ethena) — for brainstorming solutions and coordination.
- Joseph Lubin (Ethereum) — for understanding DeFi’s importance to Ethereum’s future.
- Aave service providers, particularly TokenLogic and LlamaRisk, for tireless technical and coordination work.
- Arbitrum community — for “doing the right thing and rescuing the funds from the bridge contract.”
- Mantle and Bybit teams — for “stepping up as well and showing strong support.”
The incident exposed vulnerabilities in cross-chain bridge configurations (Kelp’s 1-of-1 DVN setup) and highlighted contagion risks in interconnected lending markets. Aave saw billions in outflows as utilization spiked and bad debt estimates reached $124–230 million. Yet the rapid formation of DeFi United demonstrated the ecosystem’s growing maturity and willingness to act collectively.
Restoring the markets
Kulechov addressed ongoing debates about market structures, noting that “when capital moves, it moves at scale and market structures are less of a mitigating factor.” He emphasized that fast-moving capital during crises requires swift coordination over theoretical debates. He signaled future learnings, including a potential shift toward stronger balance sheets and risk transfer mechanisms, with a full post-mortem expected from involved teams.
As of today, Ethereum Mainnet Core markets are restoring, and Aave’s team is executing the technical plan to restore the remaining markets.
DeFi United is now being discussed as a potential permanent coordination model for future industry-wide challenges. The initiative has not only helped stabilize rsETH and Aave markets but also reinforced a key narrative: DeFi’s greatest strength lies in its community and shared resilience.
DeFi United.
Also Read: How a ‘Perfect Storm’ of 3 Bugs Led to ZetaChain’s $333K GatewayEVM Exploit
