DeFi Rebounds: Aave & Kelp DAO Restore rsETH After $293M Hack

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Aave and Kelp DAO Restore rsETH Operations After April Exploit

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DeFi markets stabilize after a $293 million hack, with key players restoring operations and confidence.
Aave’s total value locked plummeted from $26 billion to $14 billion following the exploit, highlighting market volatility.
The DeFi United initiative secured $300 million in ETH support to revive rsETH reserves and mitigate losses.

As a researcher following the Aave and Kelp DAO situation, I can report that their recovery plan following the rsETH exploit on April 18th is now complete. We’ve officially seen operations return to normal across the DeFi space after several weeks of disruption. The final step involved moving the remaining 20,373.72 rsETH into LayerZero, which has now unlocked bridging, withdrawals, minting, and rewards across all the supported networks.

Aave announced on X that its rsETH markets were back to normal. Kelp DAO confirmed the successful completion of repairs to address liquidity issues caused by a recent cross-chain attack, bringing weeks of recovery efforts to a close.

As part of the recovery plan, the final portion of rsETH has been sent to the LayerZero lockbox. Both rsETH and all Aave markets are functioning as expected.

— Aave (@aave) May 25, 2026

Recovery effort restores rsETH operations

Following a cyberattack on April 18th that resulted in almost $293 million being stolen, a recovery operation was launched. The attack, one of the largest to hit the decentralized finance world this year, was traced back to the Lazarus Group, a hacking organization believed to be linked to North Korea. The hackers exploited vulnerabilities in cross-chain transactions to steal the funds, leaving Aave with approximately $190 million in outstanding debt.

Problems quickly spread throughout the cryptocurrency lending world. Several platforms temporarily stopped operations to prevent even bigger losses, and users withdrew billions of dollars from decentralized finance services. According to data from DeFiLlama, the value held within Aave – a major DeFi platform – dropped from over $26 billion to less than $14 billion in just a few weeks as trust in the industry declined.

Leading cryptocurrency projects like Lido Finance, Ether.fi, LayerZero, and Mantle teamed up in a joint effort called DeFi United to address the situation. They pooled over $300 million in ETH to rebuild rsETH reserves and calm the markets.

Kelp DAO announced that roughly 116,000 rsETH has been recovered in the last two weeks, bringing their recovery efforts close to being finished.

Legal pressure and infrastructure changes continue

As things get back to normal after the hack, I’m still tracking some significant legal and security issues. Specifically, a federal judge in New York hasn’t ruled yet on the 30,765 Ether that Arbitrum’s Security Council froze. The judge has asked for more legal justification from both sides, and we’re expecting another hearing on June 5th. It’s clear this situation is still developing and requires careful monitoring.

Following a recent security issue, Kelp DAO is shifting some of its technology away from LayerZero and over to Chainlink’s CCIP system. This change is due to worries about how safely transactions are processed across different blockchains.

The recent $293 million hack is now considered one of the largest attacks on decentralized finance systems in 2026. It also highlighted significant vulnerabilities in the security of crypto bridges and demonstrated how a problem with a single platform can rapidly affect the entire DeFi ecosystem.

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2026-05-26 14:14