Kelp DAO burns 17.1K rsETH as Aave raises $317M – Recovery underway?

After nearly a month of crises, the troubles facing Kelp DAO and Aave [$AAVE] appear to have eased. Since the hack on the 18th of April, both protocols have worked to restore normal operations. Aave launched DeFi United to support recovery efforts, raising 137k $ETH (worth $317 million).

With the shortfall from the Kelp exploit addressed, Kelp and Aave announced a major milestone in restoring rsETH functionality.

Kelp and Aave burn exploiters’ rsETH on Arbitrum

Kelp and Aave have taken major steps to strengthen rsETH backing, improving recovery prospects. The exploiter’s rsETH was ultimately burned on Arbitrum, marking a key milestone.

After the burn, 17,132 rsETH will be gradually refilled through Aave Recovery Guardian and Kelp Recovery Safe. KelpDAO confirmed that rsETH on both Mainnet and L2s remains fully backed at all times. With this milestone achieved, rsETH withdrawals for $ETH are expected to resume within 24 hours, beginning with the first tranche routed to the LayerZero OFT adapter.

Other operations, including deposits, redemptions, bridging, and claims, will also resume over the same period.

Kelp tightens security measures

To avoid future security breaches, both Aave and Kelp have proposed to improve all levels of security. Stani Kulechov, $AAVE Founder and CEO, said the team has embarked on building a new level of resilience.

In the same vein, Kelp announced they had completed a major security hardening pass across all LayerZero bridging configurations. According to the updated security levels, verifications will require 4 independent attestors. As such, block confirmations were increased from 42 to 64, and all L2-to-L2 were deprecated.

Kelp also announced that BailSec audited these security measures. Even more so, Kelp is in the process of migrating to CCIP to tighten cross-chain bridging further, as AMBCrypto reported.

Market stabilizing but remains cautious

Although conditions, including liquidity, have all stabilized, the market approach remains cautious. Notably, the total deposits on $AAVE have remained relatively low, hovering around $27.8 billion at press time, a significant drop from $45 billion before the hack.

Source: Aavescan

However, stablecoin supply on Aave showed some recovery in the market, rising from a $7.3 billion drop to $8.7 billion, representing an increase of over $1.4 billion.

Final Summary

• Kelp and Aave reached a major milestone, burning exploiters’ 17,132 rsETH, allowing withdrawals to resume in 24 hours.
• Kelp improved security measures by completing security hardening passes across all LayerZero bridging configurations and is awaiting migration to CCIP.

Source