In brief
- DeFi United has received enough contributions to potentially restore rsETH, receiving contributions worth $303 million, as of Monday.
- The coordinated relief effort has drawn participation from across the crypto industry, including contributions from Consensys and the Avalanche Foundation.
- The total amount raised was contingent on governance proposals, including one on Arbitrum that’s expected to take roughly 49 days.
A coordinated relief effort to raise funds following Kelp DAO’s $290 million exploit this month crossed a critical threshold on Monday, receiving enough contributions to potentially cover decentralized finance’s biggest hack in recent memory.
The organization dubbed DeFi United, which has been promoted by Aave founder and CEO Stani Kulechov, has raised 132,650 Ethereum (ETH), according to its website. With Ethereum recently changing hands around $2,300, the sum was valued around $303 million.
DeFi United plans to use the funds to restore rsETH, a token that Kelp DAO’s attackers stole and used to borrow massive amounts from Aave on April 18. Since the unbacked funds were plundered, Aave’s liquidity has been strained, shaking confidence in DeFi broadly.
Over the past day, contributions have been rolling in. On Monday, Ethereum-focused development firm Consensys said in an X post that it had contributed 30,000 ETH. The Avalanche Foundation meanwhile said in an X post that it was backing the effort. (Disclosure: Consensys is one of 22 investors in an editorially independent Decrypt.)
Although DeFi United has received enough contributions to negate the value of rsETH that attackers linked to North Korea had plundered, the total amount raised is contingent on pending governance votes among other DeFi projects like Mantle, Ether.Fi, and Lido.
DeFi United’s website makes clear that the relief effort isn’t guaranteed to be successful, underscoring how its plan relies on several moving parts, particularly the ability of tokenholders governing various DeFi projects to rally around a common cause.
For example, the security council overseeing 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 ease the liquidity crunch on Aave in other ways. Tron founder Justin Sun, for example, said in an X post on Monday that Tron DAO and crypto exchange HTX have supplied $20 million worth of Tether’s USDT stablecoin on Aave’s platform.
When Kelp DAO attackers borrowed funds from Aave, they essentially exchanged rsETH for Ethereum, which prevented depositors from withdrawing funds. Many of those affected turned to stablecoins, borrowing the tokens as a way to take money out of the lending platform.
On Monday, the so-called utilization rate for markets related to USDT and Circle’s USDC stablecoin hovered around 92%, according to Aavescan. After being pinned around 100% for several days last week, the metric indicated that the liquidity crunch had slightly abated.
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