Aave-led 'DeFi United' campaign raises $300m to address Kelp DAO breach

A version of this story appeared in The Decentralised newsletter on April 28. Sign up here.

There’s been a silver lining to this month’s devastating Kelp DAO/LayerZero hack: DeFi United, an impromptu, crowdsourced recovery fund.

The fund, orchestrated by Aave, has tentatively raised more than $302 million to date, much of it from DAOs and crypto businesses within the blast radius of the hack.

That’s enough to fully cover the April 18 exploit, in which hackers affiliated with North Korea stole some $293 million in rsETH from Kelp DAO by targeting its faulty implementation of a LayerZero-provided bridge — technology that lets Kelp move assets between different blockchains.

The hackers deposited $200 million of the stolen assets as collateral on Aave and borrowed large amounts of Ether. This left Aave with at least $177 million in unrecoverable bad debt.

Aave wasn’t hacked, but it may have been the prime victim. Its deposit base fell by nearly 50% as spooked investors withdrew their crypto.

Aave Labs CEO Stani Kulechov said he would contribute 5,000 Ether worth about $11 million to the DeFi United fund. Other Aave contributors have also pledged money to the effort.

Arbitrum DAO, Mantle, and Consensys have pledged at least 30,000 Ether apiece. Ether.Fi and Lido DAO have pledged 5,000 and 2,500, respectively. Kelp DAO and LayerZero have also said they would pitch in.

More surprising, however, is the fact that businesses and people largely unaffected by the hack have also…