DeFi United Releases Plan to Restore rsETH Backing After Kelp DAO Exploit Created 116,500 Unbacked Tokens
DeFi United, a coalition of blockchain projects and crypto individuals, has proposed a detailed plan to re-collateralize rsETH following a hack on Kelp DAO that generated 116,500 unbacked tokens. The plan involves injecting fresh ETH and unwinding bad loans on platforms like Aave and Compound. It aims to stabilize affected DeFi lending markets and resume normal operations.
Substrate placeholder — needs reviewDeFi United released a detailed plan to restore the backing of rsETH, CoinDesk reported. The coalition, comprising multiple blockchain projects and crypto ecosystem individuals, aims to address the fallout from a Kelp DAO hack that occurred this month and sent shockwaves through DeFi lending markets.
An attacker exploited a vulnerability in rsETH’s bridge on April 18, 2026, forging a message that appeared legitimate and tricking the Ethereum side of the system into releasing 116,500 rsETH.
The exploit created 116,500 unbacked rsETH tokens, which were spread across multiple wallets. A significant portion of the unbacked rsETH was used as collateral on Aave and other lending platforms. Roughly 107,000 of the original 116,500 rsETH remain tied up in active positions across Aave and Compound, according to the DeFi United proposal.
DeFi United has lined up enough ETH commitments to fully re-collateralize rsETH, the proposal stated. The plan involves restoring rsETH’s backing with fresh ETH and systematically unwinding bad loans tied to the exploit. The proposal aims to fully rebalance the system and resume normal operations.
The unwind process could free up around 13,000 ETH from Aave, according to the DeFi United proposal. The proposal was circulated on Aave’s official X account, CoinDesk reported.
Key Facts
Story Timeline
4 events- 2026-04-28
DeFi United released a detailed plan to restore the backing of rsETH, circulated on Aave’s official X account.
1 sourceCoinDesk - 2026-04-18
An attacker exploited a vulnerability in rsETH’s bridge, forging a message to create 116,500 unbacked rsETH tokens.
1 sourceCoinDesk - 2026-04 (this month)
Kelp DAO hack occurred, sending shockwaves through DeFi lending markets and leading to unbacked rsETH being used as collateral on platforms like Aave.
1 sourceCoinDesk - Post-exploit (recent)
Unbacked rsETH tokens were spread across multiple wallets, with roughly 107,000 remaining in active positions on Aave and Compound.
1 sourceDeFi United proposal
Potential Impact
- 01
Stabilization of DeFi lending markets through re-collateralization and loan unwinding.
- 02
Resumption of normal operations for rsETH and affected protocols.
- 03
Recovery of approximately 13,000 ETH from Aave positions.
- 04
Potential governance approvals required across chains, introducing execution risks.
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