Aave has liquidated the Kelp DAO hacker's rsETH collateral across Ethereum and Arbitrum, recovering roughly $30 million. The move comes weeks after the exploit, which drained funds from the liquid restaking protocol. Meanwhile, DeFi United is inching closer to fully restoring the backing of rsETH, the affected token.
How the liquidation played out
The liquidation hit the hacker's positions on both Ethereum and Arbitrum. Aave’s automated liquidators stepped in once the collateral ratio fell below the required threshold. The $30 million recovery covers a significant chunk of the stolen funds, though it's not yet clear if all assets have been returned.
What happens to rsETH now
RsETH, Kelp DAO’s liquid restaking token, lost its peg during the hack. DeFi United, a protocol involved in the ecosystem, is working to restore the backing. Sources close to the process say the restoration is “getting closer,” but no timeline has been given. The token's value has been under pressure since the exploit.
The incident is the latest test of how DeFi protocols handle large-scale hacks. Aave’s ability to liquidate the hacker’s collateral shows the system working as designed — but it also highlights the risks of restaking tokens. For now, the recovery is a win, but rsETH holders are still waiting for full backing restoration.
