Compound Foundation has proposed a governance plan that offers 3000 $ETH to assist Aave in the ongoing rsETH recovery efforts under the DeFi United initiative. The proposal includes a potential contribution of up to 3,000 euros $ETH to help restore stability after the recent disruption related to rsETH. Their proposal states that while Compound’s direct exposure to the incident is expected to be limited, the protocol has chosen to participate in the recovery process.
Composite foundation suggests 3000 $ETH to Aave’s DeFi United
After the rsETH incident, the Compound Foundation and its service providers began collaborating with other ecosystem participants. Their efforts focused on monitoring developments, assessing risks and identifying possible solutions. These discussions involved several counterparties for a coordinated effort.
Initial assessments indicate that Compound’s exposure remains manageable under various recovery options. Risk and security partners, such as Gauntlet, have supported this assessment. The Foundation said the situation is still evolving, and the current picture may change in the future.
Despite little awareness, the proposal demonstrates the impact of well-coordinated action in times of market stress. By assisting with recovery efforts, Compound aims to help maintain stability across the system and minimize the broader disruption potential of the incident. This application applies to have the Compound DAO $ETH contribution allowed between 1,900 and 3,000 $ETH.
At current prices they would be between $4.3 million and $6.9 million. The final amount will be determined later, based on market conditions and the structure of the recovery plan.
A designated implementation group will determine the exact contribution. This group includes the Compound Governance Working Group, Gauntlet, security service providers and the Compound Foundation. The decision will depend on several factors. These include the final draft of the recovery plan, participation of other contributors, and the remaining shortfall in rSETH support.
The group will also take into account the condition of government bonds and market risks before finalizing the amount. Once a decision is made, the details are shared publicly, along with an explanation of how the conclusion was reached.
The proposal contains strict conditions for the release of funds. One key requirement is that the recovery plan must ensure full support from rsETH. Another condition focuses on honesty. Funds should be distributed in a neutral and balanced manner among affected users and platforms. No group should receive preferential treatment unless the technical structure of the plan so requires.
The proposal also requires a clearly defined recovery framework. Sufficient information should be available for board participants to assess how the funds will be used. If these conditions are not met, Compound reserves the right to withhold its contribution.
Part of the proposed contribution could come from restoring the attacker’s position. Around 1,857 $ETH can be obtained this way if the recovery process is successful. If this recovery is not made, the final contribution within the approved bandwidth will be adjusted accordingly.
The proposal makes clear that approval does not guarantee full implementation of the funds. The implementation group has the flexibility to contribute a smaller amount if conditions change or less capital is needed to support the recovery.
Compound’s move is part of a broader effort in the DeFi space. Several major participants, including Babylon, have joined the DeFi United initiative to address the rsETH shortage. Consensys and Joseph Lubin have pledged up to 30,000 $ETH in support, in addition to advisory input from Sharplink.
Other contributions have also been announced. Circle is buying AAVE tokens to support the ecosystem, while Renzo has deployed more than $10 million from its treasury into Aave markets to maintain liquidity. In addition, Marcelo Ruiz de Olano, co-founder of KPK, contributed 100 $ETH to the initiative.