Amid the catastrophic situation in the DeFi sector, major protocols are coming together to reduce the damage caused by the Kelp DAO security breach. On April 23, the Mantle Network came forward with a formal proposal to provide a loan facility to a coordinated relief program that is being announced by Aave.
Following this week’s rsETH incident involving @KelpDAO and @LayerZero_Core, a proposal has been put forward for Mantle to contribute a loan facility to @aave‘s coordinated relief effort.
The loan would form part of a wider coordinated framework, structured to minimize…
— Mantle (@Mantle_Official) April 24, 2026
This project is called DeFi United, which unites the DeFi sector to work on a recovery model. The main purpose of this project is to raise support to back assets that have been compromised and to stabilize the lending markets that support the entire industry.
What is the Mantle’s New Proposal?
The main part of this proposal is the creation of a coordinated framework. This framework is designed to absorb the damage that came from the depegging of rsETH.
In the proposal, Mantle MNT1.45% has proposed using its own treasury to provide a liquidity backstop. This backstop will help Aave in managing “bad debt.” This bad debt was created when attackers used unbacked tokens as collateral.
By providing a loan, Mantle is providing its support to reduce the imbalance in the market. It will help them to avoid sudden liquidations that could decrease asset prices even further.
This proposal is part of a large movement, as Mantle is not alone in raising support for it. For example, Lido Finance has committed 2,500 stETH to a dedicated relief fund.
The main goal of DeFi United is to fill the 100,000 $ETH deficit that is currently affecting the rsETH supply. Also, they want to do this without putting the full burden on users of a single protocol.
Aave is my life’s work and we’re working nonstop to find the best possible outcome for users.
I’m personally contributing 5000 $ETH to DeFi United as we continue working together with partners on formalizing more commitments. I’m working to see this resolved and market conditions…
— Stani (@StaniKulechov) April 23, 2026
Aave’s Founder himself has raised his support in this, saying that, “I’m personally contributing 5000 $ETH to DeFi United as we continue working together with partners on formalizing more commitments. I’m working to see this resolved and market conditions normalized as soon as possible.”
As of now, many DeFi projects have already shown their support to fight against the liquidity crisis, including EtherFi Foundation, Ethena, LayerZero, Tydro, the Ink Foundation, and Golem Foundation.
How the Kelp DAO rsETH Exploit Happened on April 18
The Kelp DAO incident took place on April 18 after suffering a very sophisticated attack on cross-chain infrastructure. The attackers targeted what is called a 1 of 1 verifier configuration. This configuration was inside the LayerZero bridging adapter that was used for rsETH.
By breaking into the internal “Remote Procedure Call (RPC)” nodes along with a DDoS attack against outside data sources, the attackers have hijacked the protocol verifier in an echo chamber.
This allowed the hackers to feed wrong data to the system. The fake data showed that 116,500 rsETH had been burned on the source chain. In reality, no such transaction has ever happened.
After this, the Ethereum mainnet contract released around $292 million worth of rsETH tokens, which have no backing at all. The attackers then moved these phantom tokens into Aave V3 markets across Mantle, Arbitrum, and Ethereum.
They used these fake tokens as collateral to borrow around $190 million in real $ETH and stablecoins. This trick has transferred the loss from Kelp DAO into the Aave lending pools, which created a shortfall for the depositors.
Aave Announces Relief Project to Stabilize the Ecosystem
In response to the bizarre attack, Aave has formed a collaboration of DeFi projects to provide relief in the ongoing catastrophic situation that affected tokens like Arbitrum. The purpose of DeFi United is to spread the losses across treasury holdings and protocols. This means that they will not force regular retail depositors to bear losses.
Aave has already frozen rsETH reserves across Ethereum, Base, Mantle, and Linea. This will help them to stop further spread of the damage.
