Following the Kelp DAO cyber attack in the DeFi world last week, the management team of the Aave protocol took an important step. With the new proposal submitted to the community vote, Aave brought up the transfer of 25,000 Ethereum from the treasury of its decentralized autonomous organization (DAO) to the mutual aid fund called DeFi United. This amount corresponds to approximately 58 million dollars.
Effects of Kelp DAO attack and DeFi United fund
In the incident that took place in the Kelp DAO, an attacker took advantage of the vulnerability in the LayerZero bridge to generate unsecured rsETH and used these assets as collateral on Aave to withdraw real valuable assets. It was revealed that the Aave protocol faced a significant amount of debt due to the subsequent deficit. The DeFi United fund, launched to compensate for losses, has turned into a collective support campaign contributed by leading protocols, companies and individual investors.
A total of 69,534 Ethereum has been accumulated in the DeFi United fund so far with the contribution of Golem, BGD Labs and different users. This fund, with a current value of approximately 161 million dollars, stands out as one of the largest rescue attempts in the sector in recent times.
Support poured in from other protocols
Following the incident, not only Aave but also other important DeFi platforms such as Lido DAO and Ether.fi also participated in the fundraising drive. According to the statements made on Thursday, Lido DAO stated that it could support up to 2,500 Ethereum, while Ether.fi offered a contribution of 5,000 Ethereum.
Aave’s senior executives also contributed their personal assets. Emilio Frangella, the platform’s vice president of engineering, announced that he would donate 500 Ethereum, while founder and CEO Stani Kulechov described Aave as the most important work of his life and announced that he would contribute 5,000 Ethereum.
“Aave is my life’s work and I will continue to support it with all my might to protect it.”
Credit recommendations and the recovery process in the system
On Friday, Mantle made a proposal to Aave offering a low-interest loan of up to 30,000 Ethereum to cover the outstanding debt. According to calculations, it is stated that the losses incurred can be significantly eliminated if all planned contributions are approved, including approximately 30,700 Ethereum frozen on Arbitrum after the attack.
According to the evaluation made by user X, nicknamed DCF GOD, it was noted that if all support suggestions are implemented, Aave may not need to take additional debt from Mantle.
On the other hand, according to figures shared by The Block, the total amount of locked assets of decentralized finance (DeFi) protocols is just over $80 billion. This figure represents a decrease of more than 27 percent compared to $110 billion at the beginning of the year.
JPMorgan, one of the leading investment banks, states that recent recurring attacks have reduced the interest of large institutional investors in the DeFi field and many users have directed their assets to stablecoins.
