On April 18, the Kelp DAO protocol suffered a major exploit through the LayerZero bridge. The attack left rsETH severely undercollateralized — the shortfall exceeded 100,000 ETH. Positions held by EarnETH DAO users and anyone using rsETH as collateral or an allocation were at risk of forced liquidation and deleveraging.
Aave stepped up to coordinate an industry-wide recovery fund, and within just 24 hours, more than ten major protocols had signed on.
Why Partial Coverage Isn't Enough
EarnETH is directly tied to rsETH through its strategic allocations. Without fully closing the shortfall, depositors risk losing roughly 9,000 ETH — an amount that existing loss-protection mechanisms simply cannot absorb.
The fund operates under a strict mandate: all contributions go exclusively toward covering the rsETH deficit, with no support for collateral ratios on individual positions and no compensation for secondary losses.
The Coalition and Its Contributions
Aave founder Stani Kulechov contributed 5,000 ETH from his personal funds. EtherFi Foundation committed the same amount through a Snapshot vote. Lido DAO is considering allocating up to 2,500 stETH: the proposal has been submitted for a vote in Aragon, and if approved, the funds will move from the DAO Agent address to the Lido Labs Foundation multisig and then into the recovery fund within 48 hours.
Golem Foundation, together with Golem Factory, contributed 1,000 ETH from their treasuries. Ethena is participating in the recovery effort without disclosing the amount. Mantle proposed a credit line through its DAO. Frax Finance, a partner of Aave V4, joined the coordination despite having no direct exposure to rsETH. LayerZero — the bridge exploited in the attack — also joined the recovery process. Ink Foundation and Tydro separately confirmed their participation.
Any unused funds will be returned to the contributing protocols' treasuries.
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