LayerZero Adds $23M to AAVE After Kelp DAO Hack, Boosting GHO Liquidity
LayerZero says it is joining DeFi United’s recovery effort after the $292M Kelp DAO hack and is directly supporting AAVE with $23M.
In its Tuesday announcement, LayerZero will donate 5,000 ETH and deploy another 5,000 ETH to strengthen AAVE liquidity. Using an ETH price of about $2,300 at the time of publication, the total support is roughly $23 million. LayerZero also plans further steps to increase liquidity for Aave’s native stablecoin GHO.
The Kelp DAO hack (April 18) involved RPC poisoning of LayerZero Labs’ Decentralized Verifier Network (DVN). Attackers forged cross-chain messages that released 107,000 unsupported rsETH from the Kelp bridge on Ethereum into Aave positions, creating bad debt and liquidity strain.
DeFi United, led by Aave, previously raised $300M+ in ETH and stablecoins and published a technical recovery plan. Arbitrum DAO is in the voting process for a 30,765 ETH contribution, while Consensys and Joseph Lubin allocated 30,000 ETH. Other supporters listed include Kelp DAO, Aave DAO, Mantle, Circle, and Lido—making LayerZero one of the largest backers.
Trading context: AAVE is around $96.4 in the article, down on the day. The piece notes AAVE technical levels, with strong support near ~$95.6 and a nearer resistance zone around ~$98.4.
For crypto traders, this is a sentiment and liquidity catalyst: LayerZero’s funding may improve near-term confidence around AAVE and GHO, but the market will still watch repayment progress and overall DeFi security.
Neutral
LayerZero’s $23M contribution is a concrete liquidity and confidence boost for AAVE after the Kelp DAO incident, especially with the explicit focus on improving GHO liquidity. That said, the underlying issue—bad debt created by the 107,000 unsupported rsETH entering Aave—still matters for risk pricing. Similar large DeFi “recovery funding” events after exploits (e.g., when protocol backstops and insurance-style mechanisms are announced) often cause short-term stabilization in token sentiment, but the longer-term direction depends on whether repayment and on-chain liquidity normalize.
So the immediate effect may be supportive for dips and trading volume around key support ($95–$96 area noted), but it doesn’t fully remove hack/bridge-risk concerns. Traders should watch updates on bad-debt reduction, GHO peg/liquidity metrics, and broader TVL trends; without clear progress, price action can remain range-bound or volatile.