DeFi Coalition Restores rsETH Backing Efforts with Technical Implementation Plan

A coalition of decentralized finance (DeFi) ecosystem participants has taken steps to address a recent exploit that targeted Kelp DAO's rsETH. The exploit released 116,500 rsETH from the Ethereum-side adapter, with proceeds distributed across multiple addresses and supplied as collateral on lending protocols.

According to DeFi United, the coalition has secured ETH commitments to refill the bridge in tranches. This process will allow the bridge to resume normal operation, targeting a nominal exchange ratio of 1.07 ETH for rsETH. The coalition's fundraising effort has progressively chipped away at the original 163,200 ETH shortfall.

Recovering the exploiter’s excess collateral requires governance proposals on Aave and Compound. DeFi United will provide liquidity to facilitate a controlled liquidation sequence, generating a temporary deficit that will be addressed in subsequent steps. The process aims to recover approximately 13,000 ETH from Aave and an estimated 16,776 ETH from Compound.

The final phase of the plan involves unpausing and unfreezing rsETH and ETH across affected instances and restoring loan-to-value ratios for any assets whose configurations were temporarily adjusted. Several execution risks have been flagged by DeFi United, including contingent ETH deployment on finalizing agreements and governance approvals, as well as deliberate interference by the attacker.