Aave has liquidated the Kelp DAO hacker's remaining rsETH (rseth) positions on Ethereum (eth) and Arbitrum (arb), pushing the $293 million recovery effort into its final stretch.
Aave Liquidation Details
Aave Labs announced the move on X on Wednesday, calling it a critical step in the DeFi United recovery plan. The Block and AMBCrypto reported the liquidation hours later.
The seized collateral was transferred to the Recovery Guardian, a multisignature wallet run by the DeFi United coalition.
Aave said no user funds were touched during the process.
Its Umbrella insurance module, designed to absorb bad debt automatically, was not activated.
The protocol previously estimated that clearing the hacker's books would free up roughly 13,000 Ether, valued at about $30.2 million. That figure now sits inside the recovery wallet, awaiting final distribution.
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Pinakiewicz Expert View
Thaddeus Pinakiewicz, vice president of research at Galaxy Digital, said DeFi United is now just 10% short of the Ether needed to fully restore rsETH backing.
He flagged a separate problem. Another 30,765 Ether remains frozen by Arbitrum DAO, trapped in legal limbo after US firm Gerstein Harrow LLP filed a restraining notice on Friday.
The plaintiffs hold unpaid judgments against North Korea and argue the attacker was tied to the Lazarus Group, making the funds seizable. Aave has filed an emergency motion to vacate the order.
DeFi United is still waiting on commitments from Circle, Ethena and Frax, plus Kraken-backed layer 2 Ink. Without those pledges, Pinakiewicz said, the gap cannot fully close.
Kelp DAO Background
The Apr. 18 exploit ranks among the largest DeFi attacks of 2026. Attackers manipulated Kelp's LayerZero bridge to mint 116,500 unbacked rsETH, then deposited the tokens as collateral on Aave and Compound to borrow real Ether.
Aave's total value locked fell by nearly $12 billion in the week that followed. The protocol left more than $190 million in bad debt before withdrawals stabilized.
DefiLlama data shows TVL has since climbed back above $15 billion, up from a local low of $14.2 billion on Apr. 26. Net outflows have eased, signaling that depositor confidence is slowly returning.
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