Crypto Rallies to Help Aave After Hack

Cryptocurrency firms large and small have started donating to DeFi United, a fund set up to help lending protocol Aave recover from the fallout of the $293 million Kelp DAO hack.

After the April 18 theft, hackers thought to be from North Korea moved $230 million in stolen rsETH tokens — valued the same as ether, currently $2,300 — onto Aave, taking out loans using the unbacked tokens as collateral. That left Aave with a huge amount of bad debt, which in turn led to a bank-run-style series of withdrawals that left the protocol frozen.

Now a group of firms, beginning with staking provider Lido Finance, have pledged donations and loans to help DeFi’s largest lender back the bad debt. Hackers stole 116,500 rsETH tokens, and an informal list of pledges has reached 100,000 rsETH worth — enough to cover Aave’s bad debt.

Aave founder Stani Kulechov announced a $10 million personal donation to the fund, saying, “Aave is my life’s work and we’re working nonstop to find the best possible outcome for users… I’m working to see this resolved and market conditions normalized as soon as possible.”

In an X post, Aave said it believes “ecosystem collaboration matters most in moments like this, and our priority is achieving the strongest possible available outcome for users.”

Almost one third of that 100,000 rsETH pledge comes from the Arbitrum blockchain, which froze 30,700 stolen ether tokens for which the thieves had sold their ill-gotten rsETH. It will be returned to Kelp DAO as part of the package.

April has been a bad month for the crypto industry generally when it comes to hacks and exploits. The month began with the Drift exploit, which drained $285 million. The total of all hacks this month has reached $600 million.