DeFi United Update: Mantle Backs Aave to Cover KelpDAO rsETH Bad Debt

Published: 2026-04-24 03:20:45 |

After the KelpDAO exploit broke rsETH backing via a LayerZero adapter issue, Aave launched the “DeFi United” relief effort to manage “bad debt” and address an estimated 100,000 ETH rsETH supply deficit without forcing full losses onto regular depositors. Mantle Network has now submitted a proposal to join DeFi United, using its treasury as a liquidity backstop for Aave. Aave has already frozen rsETH reserves across Ethereum, Base, Mantle and Linea, while Arbitrum froze more than 30,000 ETH of stolen funds. Attack details: on April 18, attackers reportedly hijacked a 1-of-1 verifier setup, showing 116,500 rsETH “burned,” after which Ethereum contracts released about $292m of unbacked rsETH. The attackers then moved the phantom rsETH into Aave V3 markets and borrowed about $190m in real ETH and stablecoins, pushing the losses into Aave lending pools. Broader support is expanding: Lido pledged 2,500 stETH to the relief fund, and Aave founder Stani Kulechov committed 5,000 ETH to DeFi United. LayerZero also acknowledged the issue and said it will contribute to the “best path” to restore rsETH backing. Traders should watch for improved lending-market stability as DeFi United coordinates repayments and liquidity protection after the cross-chain rsETH depeg shock.

Neutral

This is primarily a coordination and risk-management update after a cross-chain rsETH depeg. The freezing of rsETH reserves, additional liquidity backstop planning (Mantle treasury), and expanded funding commitments (Lido stETH, Stani ETH, LayerZero contribution) are meant to stabilize Aave lending markets and reduce realized losses. In the short term, however, uncertainty around bad-debt handling, repayment timelines, and continued fallout from the bridge exploit can keep sentiment cautious, especially for assets directly tied to rsETH backing. Net effect is more about risk containment than a direct positive catalyst for price, so the likely market impact on the affected cryptocurrency is neutral.