DeFi Rescue Hurts Anti-Wall Street Pitch After $10 Billion Run

Decentralized finance is in the midst of the largest coordinated rescue in its history, an effort marked by moral hazard concerns and ad-hoc negotiations that sit awkwardly with the sector’s founding pitch as a disruptor of traditional finance.

A week after a security breach at a small crypto protocol called KelpDAO triggered a $10 billion run on Aave, the largest DeFi lending protocol, the platform’s founder and a coalition of allied crypto projects are working to restore liquidity. Their goal is to let users withdraw funds and unwind positions.

So far, the group has committed Ether tokens worth about $240 ...