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

Source: Aave; Translation: Golden Finance Claw

DeFi United (a coalition 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 full process to restore rsETH to full collateralization and normal market operation.

Background of the Incident

On April 18, 2026, rsETH was attacked on the cross-chain bridge path from Unichain to Ethereum. A forged inbound data packet was validated on the Ethereum side, while the Unichain side did not perform the corresponding burn, resulting in the illegal release of 116,500 rsETH from the Ethereum adapter.

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

Currently, seven addresses associated with the attacker hold active rsETH collateral positions on Aave and Compound, involving approximately 107,000 of the original stolen 116,500 rsETH. The focus of the recovery work is twofold: (1) restore rsETH’s full reserve backing; (2) clean up affected positions in liquidity markets to recover about 107,000 rsETH worth of surplus collateral, and address the resulting market impairment.

1. Restoring rsETH Reserve Support

To restore rsETH’s reserve, it must reflect its nominal exchange rate with Kelp rsETH (currently 1.07 ETH). This is being achieved through the DeFi United initiative, which has secured committed ETH funds necessary to restore the affected system’s full operation. Final implementation depends on the completion of governance approvals, execution timetable, and formal protocol signing.

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

2. Cleaning Up Affected Positions and Reclaiming Collateral

Alongside restoring rsETH’s reserve support, the plan also includes cleaning up eight affected positions on the Ethereum core 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 the market impairment.

This process requires executing specific governance proposals deployed on Ethereum and Arbitrum. The technical execution involves controlled liquidation sequences: the oracle price of rsETH will be temporarily adjusted to facilitate efficient liquidation of positions, which will generate a temporary bad debt, to be resolved in the subsequent step. The recovered rsETH collateral will be transferred to a designated multisig wallet managed by DeFi United.

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

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

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

3. Restoring Normal Market Operation

Restoring rsETH reserve support and cleaning affected positions can be executed in parallel. The final phase of the recovery process involves canceling all suspensions and freezes of rsETH and ETH in affected instances, and restoring the loan-to-value ratios (LTV) of ETH and any assets temporarily adjusted.

Precautions

Although the plan aims to restore rsETH’s reserve without socializing losses, its implementation still carries the following risks:

• Fund deployment: DeFi United has secured sufficient ETH commitments, but deployment depends on final protocol approval and governance.

• Governance and liquidation execution: Closing affected positions requires passing and correctly executing proposals on Ethereum and Arbitrum. Malicious interference by the attacker could lead to incomplete bad debt accumulation, requiring additional liquidation steps.

• Cross-chain bridge security: Despite additional security measures implemented by LayerZero and Kelp before resuming operation, residual risks remain until production environment verification is complete. To manage risks, ETH to rsETH conversions and lock deposits will be conducted in multiple batches.

Coordinated execution of these steps as planned will ensure rsETH’s reserve support is fully restored and all affected markets stabilize. Relevant information will be publicly disclosed as recovery progresses.