What happened between Aave and the Kelp DAO hacker?

Aave liquidated the Kelp DAO attacker’s remaining rsETH positions on Ethereum and Arbitrum following the $293 million exploit in April 2026. The recovered collateral was transferred to DeFi United’s Recovery Guardian wallet as part of the ecosystem recovery plan.

Why is the Kelp DAO exploit important for DeFi investors?

The exploit was one of the largest DeFi hacks of 2026 and disrupted billions of dollars in lending market liquidity. It also damaged confidence in restaking and leveraged DeFi strategies tied to Ethereum-based assets.

What is rsETH and why does restoring its backing matter?

rsETH is a restaked Ether token linked to Kelp DAO’s staking ecosystem. Fully restoring its Ether backing is important because it helps stabilise user confidence and reduces systemic risks across DeFi lending platforms.

How much of the recovery effort is now complete?

Galaxy Digital’s Thaddeus Pinakiewicz said the recovery fund is now only about 10% short of the Ether needed to fully restore rsETH backing. That suggests most of the required capital has already been secured or recovered.

Did Aave users lose funds from the Kelp DAO exploit?

Aave said user funds were not impacted by the liquidations tied to the exploit. The protocol also confirmed that its Umbrella insurance mechanism was not activated during the recovery process.

How much Ether was recovered through the liquidations?

Aave previously estimated that liquidating the attacker’s collateral on Ethereum and Arbitrum would release around 13,000 ETH. At current prices, that Ether is worth roughly $30.2 million.

What is Arbitrum DAO voting on right now?

Arbitrum DAO members are voting on whether to release the frozen Ether to the DeFi United recovery fund. More than 90% of votes currently support the proposal ahead of the vote closing on Friday.

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Aave closes Kelp hacker rsETH positions

Written by Brie CarterPublished May 7, 2026, 5:00 AM

Aave Labs has liquidated the Kelp DAO attacker’s remaining rsETH positions on Ethereum and Arbitrum in a major step towards restoring the protocol after April’s $293 million exploit.

The liquidated collateral was transferred to Recovery Guardian, a multisignature wallet managed by DeFi United, according to a Wednesday statement from Aave on X.

Galaxy Digital vice president of research Thaddeus Pinakiewicz said the recovery fund is now only around 10% short of the Ether required to fully restore backing for the Kelp DAO restaked Ether token, rsETH.

“This marks a critical step in the DeFi United recovery plan,”

Aave said.

The exploit on April 18 triggered one of the largest decentralised finance hacks of 2026, disrupting billions of dollars in liquidity across lending markets and damaging investor confidence in the broader ecosystem.

Aave said user funds were not impacted by the liquidations and confirmed that Umbrella, the protocol’s insurance mechanism designed to protect against bad debt, was not activated during the recovery process.

The protocol previously estimated that liquidating the attacker’s collateral on Ethereum and Arbitrum would release about 13,000 Ether worth roughly $30.2 million at current prices.

However, another 30,765 ETH remains frozen after US law firm Gerstein Harrow filed a restraining notice preventing Arbitrum DAO from redistributing the assets, while Aave has since filed an emergency motion seeking to overturn the order.

Arbitrum DAO members are still voting on whether to release the frozen Ether to the DeFi United recovery fund, with more than 90% of voters currently supporting the proposal ahead of Friday’s deadline.

DeFi United is also awaiting additional support commitments from Circle, Ethena, Frax and Kraken-developed Ethereum layer-2 network Ink.

At the time of reporting, Ethereum price was $2,317.29.