Aave releases rsETH roadmap: restoring full collateralization and clearing affected positions in this way

Source: Aave; Compiled by: Golden Finance Claw

DeFi United (an alliance composed of ecosystem participants) has released a technical implementation plan aimed at restoring the reserve backing of KelpDAO rsETH after the April 18 incident. The plan covers the entire path to bring rsETH back to full collateralization and restore normal market operations.

Background of the Incident

On April 18, 2026, rsETH was attacked on the cross-chain bridge route from Unichain to Ethereum. A forged inbound data packet was verified on the Ethereum side, while the Unichain side did not perform the corresponding burn, resulting in 116,500 rsETH being illegally released from the adapter on the Ethereum side.

The 116,500 rsETH that were released were then distributed across multiple addresses. Part of them were deposited as collateral into Aave V3 on Ethereum, while part of them were bridged to Arbitrum and used to open positions on Aave Arbitrum. The remaining portions were transferred through different platforms.

At present, seven addresses associated with the attacker hold active rsETH collateral positions on Aave and Compound, involving approximately 107,000 of the 116,500 rsETH originally stolen. There are two focuses for the recovery work: (1) restoring rsETH to full reserve backing; (2) clearing affected positions in liquidity markets to recover surplus collateral worth approximately 107,000 rsETH, and addressing the resulting market impairment.

1. Restoring rsETH Reserve Backing

To restore rsETH’s reserve backing, it must reflect its nominal Kelp rsETH redemption ratio (currently 1.07 ETH). This is being achieved through the DeFi United initiative, which has secured committed ETH funding required to restore the affected system to comprehensive normal operation. Final execution depends on the completion of relevant governance approvals, the execution timeline, and the signing of formal agreements.

Subject to successful execution of the plan, rsETH’s reserve backing will be fully restored by depositing ETH into the cross-chain bridge lock contract (RSETH_OFTAdapter 0x85d456b2…98ef3). The restoration process includes converting the committed ETH into rsETH in batches, and then transferring it into the affected lock contract, enabling the cross-chain bridge to securely resume full operation. LayerZero and Kelp have both implemented additional measures to ensure the security of the cross-chain bridge after recovery operations are resumed.

2. Clearing Affected Positions and Reclaiming Collateral

Alongside restoring rsETH reserve backing, the recovery plan also includes clearing eight affected positions in the core Ethereum market of Aave and the Arbitrum market. Clearing these positions is a necessary step to recover approximately 13,000 ETH worth of funds on Aave and to address market impairment affecting the affected markets.

This process must be carried out through specific governance proposals deployed on Ethereum and Arbitrum. The technical execution involves controlled liquidation sequences: the rsETH oracle price will be temporarily adjusted to enable efficient liquidation of the positions, which will create a temporary bad debt that will be addressed in the next step. The recovered rsETH collateral will be transferred to a designated multisignature wallet managed by DeFi United.

The above configuration adjustments are temporary and limited to the scope of recovery execution. After liquidation is completed, all such adjustments will be fully reverted, and it is expected that the Aave protocol will not undergo any lasting configuration changes due to this governance proposal.

After collateral is safely recovered, the rsETH price oracle will be restored. Subsequently, the recovered rsETH will be exchanged for ETH via Kelp’s standard redemption process. The resulting ETH will be used to cover the bad debt in the Aave Ethereum and Arbitrum markets.

Compound will take a similar approach to clear the attacker’s positions, with liquidity provided by DeFi United. This initiative, led by its team, is expected to recover funds with a value of approximately 16,776 ETH upon completion. During this period, the WETH and rsETH reserves on the core Ethereum, Arbitrum, Base, Mantle, and Linea will remain frozen.

3. Restoring Normal Market Operations

Restoring rsETH reserve backing and clearing affected positions can be executed in parallel. The final phase of the recovery process includes canceling the pause and freeze status of rsETH and ETH across all affected instances, and restoring the loan-to-value ratio (LTV) for ETH and any assets whose configurations were temporarily adjusted.

Precautions

Although the plan aims to restore rsETH reserve backing without socializing losses, execution is still subject to the following risks:

• Fund deployment: DeFi United has obtained sufficient ETH commitments, but deployment still depends on the protocol’s final settlement and governance approvals.

• Governance and liquidation execution: Closing affected positions requires governance proposals on Ethereum and Arbitrum to pass and be executed correctly. Malicious interference by the attacker may cause bad debt to accumulate incompletely, which would necessitate additional liquidation steps.

• Cross-chain bridge security: Although LayerZero and Kelp have implemented additional security measures before resuming operations, there is still residual risk until production-environment validation is completed. To manage risk, conversions from ETH to rsETH and lock deposits will be carried out in multiple batches.

Coordinating and executing these steps as planned will ensure that rsETH reserve backing is fully restored, and that all affected markets move toward stability. As recovery work progresses, relevant information will be publicly disclosed.