Source: Aave; Compiled by: Jinse Finance Claw
DeFi United (a consortium of ecosystem participants) has released a technical implementation plan aimed at restoring reserve support for KelpDAO rsETH following the April 18 incident. The plan covers the entire path to restore rsETH to full collateral and resume normal market operations.
Background of the Incident
On April 18, 2026, rsETH was attacked on the Unichain-to-Ethereum cross-chain bridge path. A forged inbound data packet was verified on the Ethereum side, but the Unichain side did not perform the corresponding burn, resulting in 116,500 rsETH being illegally released from the adapter on the Ethereum side.
The 116,500 released rsETH were subsequently distributed across multiple addresses. A portion was deposited as collateral on Aave V3 on Ethereum, another portion was bridged to Arbitrum and used to open positions on Aave Arbitrum. The remainder was transferred through different platforms. Currently, seven addresses associated with the attackers hold active rsETH collateral positions on Aave and Compound, involving approximately 107,000 of the original 116,500 stolen rsETH. The recovery efforts have two main focuses: (1) restoring adequate reserve support for rsETH; and (2) clearing affected positions in the liquidity market to recover approximately 107,000 rsETH of surplus collateral and addressing the resulting market impairment. 1. Restoring rsETH Reserve Support To restore rsETH reserves, they must reflect their nominal Kelp rsETH exchange rate (currently 1.07 ETH). This is being achieved through an initiative by DeFi United, which has secured the ETH commitment funds needed to restore the affected system to full operational status. Final execution depends on the completion of relevant governance approvals, an execution timeline, and the signing of a formal agreement.
Assuming the plan is successfully executed, the rsETH reserves will be fully restored by depositing ETH into the cross-chain bridge staking contract (RSETH_OFTAdapter 0x85d456b2…98ef3). The restoration process involves converting committed ETH into rsETH in batches and then transferring it to the affected staking contract, thereby enabling the cross-chain bridge to safely resume full operation. Both LayerZero and Kelp have implemented additional measures to ensure the security of the cross-chain bridge after the resumption of operations.
2. Cleaning up affected positions and recovering collateral
In addition to restoring rsETH reserve support, the restoration plan also includes cleaning up eight affected positions in the Aave Ethereum Core market and the Arbitrum market.
Cleaning up these positions is a necessary step to recover approximately 13,000 ETH worth of funds on Aave and address the impact of market impairment. This process requires execution via a specific governance proposal deployed for Ethereum and Arbitrum. The technical execution involves a controlled liquidation sequence: the oracle price of rsETH will be temporarily adjusted to enable efficient liquidation of the positions, resulting in a temporary bad debt, which will be addressed in the next step. The recovered rsETH collateral will be transferred to a designated multisignature wallet managed by DeFi United. The aforementioned configuration adjustments are temporary and limited to the scope of the recovery execution. Once the liquidation is complete, all such adjustments will be fully reverted, and no persistent configuration changes are expected to occur on the Aave protocol as a result of this governance proposal. Once the collateral is safely recovered, the rsETH price oracle will be restored. Subsequently, the recovered rsETH will be exchanged for ETH through Kelp's standard redemption procedure. The resulting ETH will be used to cover bad debts in the Aave Ethereum and Arbitrum markets. Compound will take a similar approach to clean up the attacker's positions, with DeFi United providing the necessary liquidity. This team-led initiative is expected to recover approximately 16,776 ETH upon completion. During this period, WETH and rsETH reserves on Ethereum Core, Arbitrum, Base, Mantle, and Linea will remain frozen. 3. Resumption of Normal Market Operations The restoration of rsETH reserve support and the clearing of affected positions can be performed in parallel. The final stage of the restoration process includes removing the suspension and freeze status of rsETH and ETH in all affected instances and restoring the loan-to-value (LTV) ratio of ETH and any assets whose configurations were temporarily adjusted. **Important Notes** While this plan aims to restore rsETH reserves without socializing losses, execution is still subject to the following risks: **Capital Deployment:** DeFi United has secured sufficient ETH commitments, but deployment still depends on protocol finalization and governance approval. **Governance and Liquidation Execution:** Closing affected positions requires the passage and proper execution of governance proposals on Ethereum and Arbitrum. Deliberate interference by attackers could result in incomplete bad debt accumulation, necessitating additional liquidation steps. Cross-chain bridge security: Despite the additional security measures implemented by LayerZero and Kelp prior to resuming operations, residual risks remain until production environment verification is complete. To manage these risks, the ETH to rsETH conversion and staking deposits will be conducted in batches. Coordinating these steps according to plan will ensure the full restoration of rsETH reserve support and the stabilization of all affected markets. Relevant information will be publicly disclosed as the recovery efforts progress.