DeFi United Raises $160M Toward $200M Aave Bad Debt Target
DeFi United, the coordinated recovery fund established in the wake of the Kelp DAO $292M bridge exploit, has secured $160 million of the roughly $200 million needed to cover bad debt left on Aave’s lending markets. Blockchain analytics firm Arkham confirmed the figure on Saturday, identifying Mantle and Aave DAO as the largest contributors, having collectively deposited 55,000 ETH worth approximately $127 million. AAVE is trading at $95.92, up 1.27% in the past 24 hours, while Arbitrum’s ARB token sits at $0.1259, down 4.21%.
How the $160M Was Assembled
The April 18 exploit allowed an attacker to mint 116,500 unbacked rsETH tokens and post them as collateral on Aave V3 to borrow wrapped ETH, leaving the protocol with more than $190 million in impaired positions and triggering roughly $10 billion in deposit withdrawals. Aave founder Stani Kulchev committed 5,000 ETH personally, worth approximately $11.7 million at current prices. Babylon Foundation added $3 million USDT split across Aave V3 and V4, with interest earmarked for future Babylon-Aave integrations. The Solana Foundation also joined, lending USDT into Aave for the first time, with its president Lily Liu stating: “We like competition. We compete hard. But if we zoom out, we’re all pushing toward open finance and open systems.”
A further $215 million has been pledged conditionally by Arbitrum, Mantle, Ether.fi and Lido, all subject to governance votes. LayerZero, Ethena, Ink Foundation and Frax Finance have also signaled participation. The recovery timeline is set at approximately 49 days, with Aave stating that even a partial recovery “would still meaningfully reduce the shortfall.”
Bitcoin BTC$64,240.00▼0.07%
Ethereum ETH$1,679.72▼0.50%
Tether USDT$0.9994▲0.02%
BNB BNB$609.93▼0.33%
USDC USDC$0.9998▲0.02%
XRP XRP$1.15▼0.05%
Solana SOL$68.36▼0.17%
TRON TRX$0.3173▲1.15%
Figure Heloc FIGR_HELOC$1.03▲0.08%
Dogecoin DOGE$0.0885▼1.68%Arbitrum Governance Vote Targets Frozen 30K ETH
Aave Labs submitted a proposal to the Arbitrum DAO on Saturday requesting that 30,765 ETH, frozen by the Arbitrum Security Council after the exploit and currently valued at approximately $73.5 million, be redirected to the DeFi United recovery address. That address is controlled jointly by Aave, Kelp DAO and blockchain security platform Certora. The proposal carries backing from Kelp DAO, LayerZero, Ether.fi and Compound, and Aave Labs said it would return the funds if the recovery effort fails. The Arbitrum community has been given time to respond before any vote proceeds, per the Cointelegraph report on the proposal.
What this recovery effort demonstrates is that coordinated infrastructure-level responses are possible at scale, even when the attack vector is operational rather than a code flaw. The $40 million gap that remains is real, and governance execution carries risk. But $160 million raised in days, from competitors and adjacent ecosystems alike, is proof that the incentive to preserve open financial rails runs deeper than any single protocol’s balance sheet.
