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Kelp Exploit Aftermath: DeFi Protocols Join Hands to Restore rsETH Following $293 Million Hack

Kelp Exploit Aftermath: DeFi Protocols Join Hands to Restore rsETH Following $293 Million Hack

Here's how DeFi protocols have pooled funds to restore lost Ether tokens after a major exploit.

Written by Rahul Dhingra, Edited by David Delima | Updated: 24 April 2026 15:10 IST

Kelp Exploit Aftermath: DeFi Protocols Join Hands to Restore rsETH Following $293 Million Hack

Photo Credit: Unsplash/Ewan Kennedy

Protocols coordinate efforts to stabilise assets after a major exploit

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Highlights

Over 43,000 ETH pledged to stabilise rsETH backing
Hack triggered bad debt across lending platforms
Multiple protocols contribute funds to the recovery effort

Decentralised Finance (DeFi) protocols have come together in an attempt to restore the backing of Restaked Ether (rsETH) following the $293 million (roughly Rs. 2,762.40 crore) hack of the Kelp restaking platform on Saturday. This exploit has led to a liquidity crunch. The amount pledged by these DeFi protocols has now accumulated 43,500 Ether, which is worth over $101 million (roughly Rs. 952.23 crore). The Decentralised platform Aave has called this effort “DeFI United”. Crypto protocols involved also include Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation, and Tyrdo.

Crypto Protocols Step Up to Restore rsETH

Last week, hackers managed to grab hold of 116,500 Kelp DAO Restaked ETH tokens from the company's LayerZero-powered bridge, then used them as collateral on Aave v3 to borrow wrapped Ether, resulting in about $195 million (roughly Rs. 1,838.46 crore) in bad debt on Aave. Later on, the Ethereum layer-2 network Mantle decided to send a proposal to lend up to 30,000 Ether to Aave DAO to address the bad debt in return for yield.

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Other DeFi protocols also stepped up as EtherFi Foundation proposed a contribution of 5,000 Ether, while the Golem Foundation and Golem Factory jointly offered 1,000 Ether towards the initiative. Lido Dao has also offered a one-time, capped contribution of 2,500 Lido Staked Ether (stETH) to the cause, provided that other protocols must also step in to fully fund the recovery package and close the deficit.

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Reports also say that Layer-2 blockchain, Ink Foundation, LayerZero, and lending and borrowing platforms Tyrdo and Frax Finance have also pledged undisclosed ETH funds towards this project. Aave founder and CEO Stani Kulechov has also personally pledged 5,000 Ether.

On this incident, the Aave Foundation posted saying, “We believe ecosystem collaboration matters most in moments like this, and our priority is achieving the strongest possible available outcome for users, said Aave on Thursday. Multiple strong indicative commitments are now in place to join this effort toward restoring the backing of rsETH.”

Aave service providers have been leading the DeFi United effort to restore rsETH's backing since the April 18 incident.

We believe ecosystem collaboration matters most in moments like this, and our priority is achieving the strongest possible available outcome for users.… https://t.co/e4fiS6yTxv
— Aave (@aave) April 23, 2026

DeFi United has become the need of the hour for DeFi protocols to tackle malicious participants in the industry. This week, another incident occurred wherein the Sui-based Defi protocol Volo has disclosed a security breach that resulted in the loss of approximately $3.5 million (roughly Rs. 33 crore) in digital assets.

The protocol highlighted that the exploit was limited to three isolated vaults and that around $28 million (roughly Rs. 263.53 crore) in total value locked across other vaults is safe, with no shared vulnerabilities identified. As the crypto market grows and attracts more capital, it will be important to have stronger protections, better user education, and better infrastructure to lessen the effects of future hacks.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.

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Further reading: Cryptocurrency, Crypto Hacks, Crypto Scams

Rahul Dhingra

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Rahul Dhingra is a crypto writer at Gadgets 360, where he covers the exciting world of Cryptocurrency, Blockchain, Defi and Web3. Before joining Gadgets 360, he worked as a content specialist for a European-based Crypto Exchange. Rahul loves storytelling, not just through the written word but also through the visual medium. Beyond his professional life, Rahul is a sports fanatic. Whether it’s cricket or football, his passion for the game is contagious. More