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In response to the devastating KelpDAO hack on April 18, which resulted in nearly US$300 million (approximately AU$406 million) in liquid staking assets being stolen, a diverse coalition within the Ethereum ecosystem has mobilised to create the DeFi United recovery fund. This initiative aims to provide financial support for those affected by the exploit.
Key Contributions and Initiatives
The lending protocol Aave has emerged as a pivotal force behind this recovery effort. Aave committed 25,000 ETH, almost AU$50 million, to the fund, actively working to rally additional contributions from other stakeholders. As it stands, total commitments have exceeded US$300 million, though many of these promised funds still require approval through governance votes.
This unprecedented collaboration stems from the extensive fallout of the KelpDAO exploit, which adversely affected multiple markets within DeFi protocols, including Aave. An Aave Labs spokesperson expressed the community’s united goal: “There’s a shared priority around supporting users and restoring normal market conditions. Many participants here are deeply entrenched in DeFi and have a direct interest in the market’s functionality.”
Broader Community Engagement
Aside from Aave’s substantial initial commitment, several other organisations have pledged support. Notable contributions include:
- Consensys (parent company of MetaMask) is prepared to contribute 30,000 ETH.
- Lido, a popular staking platform, has proposed setting aside 2,500 of its stETH tokens in support.
- EtherFi has signalled a potential contribution of 5,000 ETH.
- The Mantle network plans to establish a credit facility, potentially providing up to 30,000 ETH as a liquidity backstop.
In addition to these institutional commitments, various individuals and stakeholders outside the Ethereum ecosystem, such as Tron founder Justin Sun and the Solana Foundation, have also stepped forward with contributions.
Direct Action from Community Members
In a further show of solidarity, several projects are making direct deposits into Aave’s lending pools to reinforce its finances. For example, Renzo, a liquid staking protocol, has already deposited over US$10 million (around AU$14 million), while the Babylon Foundation is deliberating over a US$3 million (approximately AU$4.1 million) deposit in USDT.
Moreover, Circle Ventures has begun acquiring AAVE tokens, articulating its commitment to support the DeFi infrastructure, stating, “strong DeFi infrastructure does not build itself… we’re backing that ecosystem and the entire community built around it.”
Proposed Governance Measures
Further initiatives are underway within the community. Aave’s governance system is currently voting on a proposal that could increase its recovery fund commitment to a total of 250,000 ETH. Additionally, Aave Labs is advocating for the release of over 30,000 frozen ETH from Arbitrum’s Security Council to aid affected rsETH holders and strengthen backing.
Community Sentiment
This extensive collaborative effort is reaffirming the resilience and interconnectedness of the Ethereum DeFi ecosystem. Joseph Lubin, founder of Consensys, echoed this sentiment, stating, “The Ethereum ecosystem has always been at its best when it moves together,” and highlighting the importance of a coordinated response to safeguard users and reinforce the robust infrastructure that the community has cultivated.
DeFi United exemplifies the unity and determination of the Ethereum community to navigate challenges collectively, ensuring that users are protected and that the broader ecosystem remains viable amid crises.
