DeFi United, a coalition of DeFi ecosystem participants led by Aave service providers, has published a technical implementation plan aimed at restoring full backing for KelpDAO’s rsETH token following the April 18 exploit. The plan outlines how the system will re-establish rsETH’s ETH peg, unwind affected lending positions, and stabilize impacted markets across multiple chains.
The recovery effort follows a coordinated structure that separates backing restoration, collateral recovery, and market normalization into parallel tracks. Execution remains subject to governance approvals and final agreement confirmations across involved protocols.
Exploit exposed bridge verification failure
The incident occurred when a forged inbound message on the Unichain-to-Ethereum bridge route was incorrectly verified on Ethereum without a corresponding burn on the source chain. This mismatch enabled the unauthorized minting of 116,500 rsETH.
The value extracted from the exploit is estimated at approximately $292 million. A large portion of the stolen rsETH moved into lending markets such as Aave on Ethereum and Arbitrum. Additional funds spread across other protocols and wallets.
Seven wallets linked to the attacker still control active positions across Aave and Compound. These positions represent around 107,000 rsETH of the original stolen amount, forming the central focus of the recovery process.
ETH commitments support full rsETH restoration
The DeFi United coalition has confirmed that ETH commitments are in place to restore rsETH backing to its nominal ratio of 1.07 ETH. The plan depends on governance approval and final execution agreements before activation.
Once approved, ETH will be deposited into a designated bridge lockbox contract (RSETH_OFTAdapter 0x85d456b2…98ef3). The process converts ETH into rsETH in structured tranches rather than a single transfer event.
Each tranche enters the lockbox system, restoring backing in measured stages. This structure aims to reduce operational stress on bridge infrastructure while returning rsETH to its intended collateral position.
Controlled liquidation addresses affected positions
The recovery strategy includes clearing eight affected positions across Aave Ethereum Core and Arbitrum markets. These positions represent a critical step in recovering approximately 13,000 ETH in value and resolving system-level imbalance caused by the exploit.
A controlled liquidation sequence forms the core mechanism of this process. The rsETH oracle price will be temporarily adjusted to allow orderly liquidation of impacted positions. Once executed, rsETH collateral moves into a DeFi United-controlled multisig wallet.
The recovered assets will then be redeemed for ETH through KelpDAO’s standard redemption mechanism. That ETH will be used to offset temporary deficits created during liquidation across Aave markets.
Compound will follow a similar approach to unwind the attacker’s exposure, with estimated recovery of approximately 16,776 ETH.
Temporary freezes remain across multiple chains
During the recovery phase, WETH and rsETH reserves remain frozen across Ethereum Core, Arbitrum, Base, Mantle, and Linea. The freeze limits additional exposure while liquidation and settlement steps progress.
These restrictions are temporary and will be lifted once recovery operations complete and system stability is confirmed.
Market normalization follows full settlement
The final stage of the plan focuses on restoring standard protocol conditions. Once rsETH backing is restored and collateral positions are cleared, DeFi United will coordinate the unpausing of rsETH and ETH operations across affected deployments.
Loan-to-Value ratios and other temporarily adjusted parameters will also return to pre-incident configurations. The design ensures that no permanent structural changes remain after recovery completes.
Execution risks and governance dependency
The plan requires coordinated governance approvals across Ethereum and Arbitrum. Without successful votes and execution alignment, liquidation and restoration steps cannot proceed.
DeFi United has secured ETH commitments, but deployment still depends on finalized agreements and approval processes. During execution, attacker interference remains a risk factor that could affect deficit calculations and require additional liquidation cycles.
Security upgrades from LayerZero and KelpDAO have been introduced ahead of bridge resumption. However, these measures remain under production validation and will be tested further during real execution conditions.
The coalition stated that ETH-to-rsETH conversion will occur in tranches to manage risk exposure and maintain controlled system recovery.
Structured recovery defines next phase for rsETH
The rsETH restoration plan outlines a coordinated attempt to resolve unbacked supply, recover locked collateral, and stabilize DeFi lending markets. Execution across governance, liquidation, and redemption systems will determine the speed of full recovery, with progress expected to be communicated as each stage completes.
Tanya Petrusenko
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