Lido proposes using up to $5.8M in stETH to cover Kelp's funding gap

Odaily reported that Lido has initiated a proposal for the DAO to allocate up to 2,500 stETH (approximately $5.8 million) to cover the rsETH asset deficit caused by the recent attack on Kelp DAO.

Lido noted that the exploit, based on LayerZero, has led to insufficient rsETH reserves and triggered a chain reaction within the DeFi ecosystem, including rising interest rate pressures, strained lending markets, and the risk of forced liquidation for some leveraged strategies.

The proposal emphasizes that these funds will only be used as part of a full recovery plan, contingent on the entire gap being completely filled.

Previously, the attack on Kelp DAO, involving approximately $292 million, had also impacted Aave, causing bad debt issues, and its total value locked (TVL) once dropped by nearly $8 billion.