Aave Unveils Implementation Plan to Rebuild rsETH Backing as DeFi United Coalition Expands to Compound
Aave founder Stani Kulechov on Tuesday released a technical rollout plan aimed at restoring rsETH backing across impacted protocols, with execution steps expected to begin within days.
The recovery effort is designed around two workstreams: rebuilding rsETH's intended 1.07 ETH backing ratio through staged ETH deposits, and unwinding eight affected positions on Aave. A post-incident review found that 98% of rsETH collateral on Aave was concentrated in a single looping strategy, a structural weakness that magnified losses across the platform.
The cross-protocol response group, DeFi United, has expanded to include Compound, in what is shaping up as one of the broadest coordinated responses to a DeFi exploit in recent memory.
Exploit details and current exposure
The April 18 exploit hit rsETH's bridge on the Unichain-to-Ethereum route. An inbound packet was forged and validated on Ethereum without a corresponding burn on Unichain, leading the Ethereum-side adapter to release 116,500 rsETH. The attacker dispersed funds across multiple addresses, depositing a sizable portion as collateral on Aave V3 on Ethereum and bridging another portion to Arbitrum to open Aave positions there. The remainder moved through other venues.
Cryptoquant analysts described the fallout as the most severe DeFi liquidity crunch since 2024. Seven addresses tied to the exploiter still maintain active rsETH-backed positions across Aave and Compound, accounting for about 107,000 rsETH of the 116,500 stolen.
Track 1: Rebuilding the 1.07 ETH backing ratio
DeFi United says rsETH needs its nominal Kelp rsETH exchange ratio of 1.07 ETH restored to normalize market function. The group has secured ETH commitments to reach that target, with final execution contingent on governance approvals and definitive agreements.
Operationally, the plan converts committed ETH into rsETH in tranches as a risk-management measure, then deposits rsETH into the bridge lockbox contract. LayerZero and Kelp have added security measures ahead of bridge reactivation, though the plan notes residual risk remains until the changes are validated in production.
Track 2: Controlled liquidations to clear exploiter positions
Unwinding eight impacted positions across Aave's Ethereum Core and Arbitrum markets requires governance proposals to pass and execute on both networks. The proposed mechanism temporarily adjusts the rsETH oracle price to enable efficient liquidations, creating a controlled deficit that is later covered using ETH recovered by redeeming rsETH collateral. All parameter changes are intended to be temporary and fully reverted, leaving no lasting modifications to the Aave protocol.
This leg targets roughly 13,000 ETH currently locked in Aave positions. In parallel, Compound is coordinating a clearance of the exploiter's position with DeFi United and providing needed liquidity, a process expected to recover an additional 16,776 ETH on Compound.
The plan also flags governance and execution risk. Because the exploiter still holds active positions on both Ethereum and Arbitrum, deliberate interference could disrupt the liquidation sequence and force additional steps. DeFi United says the structure is designed to restore rsETH backing without socializing losses, but that outcome depends on smooth execution across governance votes and liquidation procedures.
