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>>Aave settles its final $30 million hacker positions after the $293 million KelpDAO exploit.

Aave settles its final $30 million hacker positions after the $293 million KelpDAO exploit.

crypthub

about 11 hours ago

Liquidation Progress

Aave has completed liquidation of the remaining rsETH positions linked to the KelpDAO hack on Ethereum and Arbitrum. The $293 million exploit left over $190 million in bad debt and a rsETH supply about 10 % below the needed Ethereum backing. Recovered assets sit in the Recovery Guardian multisig managed by DeFi United, and user deposits were never directly affected. Aave’s Umbrella protection system was not triggered during the event.

Legal Freeze on ETH

The liquidation freed roughly 13,000 ETH (~$30 million), but 30,765 ETH remain frozen by the Arbitrum DAO after a U.S. court injunction. The injunction cites claims linked to North‑Korea‑affiliated actors, prompting Aave to file an emergency motion to lift the freeze. More than 90 % of DAO voters now favor releasing the ETH to the DeFi United recovery fund. A final vote is scheduled for Friday.

Stablecoin Support

DeFi United is courting stablecoin issuers Circle, Ethena and Frax, plus Ink from Kraken, to cover the remaining shortfall. Their contributions could bridge the gap and complete Aave’s recapitalization. The hack, the largest of 2026, exposed deep inter‑connectivity in modern DeFi.

Market Recovery & Future Implications

Aave’s TVL dropped nearly $12 billion after the attack, bottomed at $14.2 billion, and has now climbed back above $15 billion. Withdrawal rates have slowed, suggesting gradual market confidence. Ongoing legal disputes and the Arbitrum DAO vote remain key risks. The recovery illustrates a new model where decentralized communities, legal actors, and centralized stablecoin issuers cooperate in crisis response.