Circle has announced its purchase of AAVE tokens, pointing to Aave’s pivotal role in shaping the future of decentralized finance. This announcement came on April 27 — nine days after the Kelp DAO protocol hack via the LayerZero bridge, which left rsETH undercollateralized by more than 100,000 ETH.
Aave has stepped up to coordinate the DeFi United industry recovery fund, with Circle joining the initiative as a key participant. The company has not disclosed the total purchase volume.
What Happened to rsETH
On April 18, an attack on Kelp DAO via the LayerZero bridge caused a massive collateral deficit for rsETH. This exploit put all users holding rsETH as collateral or part of an allocation at risk, including EarnETH DAO depositors. Without a full recovery of the missing funds, they face a potential loss of approximately 9,000 ETH — a gap that existing protection mechanisms cannot bridge.
The DeFi United fund operates under a strict mandate: capital is used exclusively to cover the rsETH deficit, without supporting collateral ratios or compensating for secondary losses.
Community Reaction
Part of the community viewed Circle's move as a strong institutional signal. As Aave is a major consumer of USDC within DeFi, the stablecoin issuer’s token purchase looks like a strategic reinvestment into its own liquidity. Others, however, met the post with outright hostility.
The primary criticism centers on the fact that Circle failed to freeze the hacker addresses responsible for moving over $230M in USDC through CCTP during the recent $280M Drift Protocol exploit. Following that incident, Drift investors filed a class-action lawsuit against Circle, and the stablecoin giant’s shares dipped on April 9.
“Support from a company that can freeze your coins at any moment?” one X user remarked.
“DeFi United — more like uniting DeFi protocols into your centralized system,” another added.
Several users pointedly asked why Circle didn't step in to help Drift when it mattered most.