Aave, a lending platform, has successfully raised approximately $160 million to cover the $200 million in bad debt resulting from the largest DeFi exploit of the year, as reported by Arkham on Saturday. The analytics platform stated, 'To date, AAVE has raised $160M to cover the bad debt from the Kelp DAO Exploit, at defiunited.eth. The largest contributors, Mantle and AAVE DAO, have together raised 55,000 ETH, equivalent to $127M.' Last week, Aave and several major crypto firms launched a coordinated recovery effort, DeFi United, to stabilize DeFi markets following a $292 million security breach that left the crypto borrowing sector's largest lender facing a financial crisis. The initiative, led by Aave service providers, aims to restore support for rsETH, the yield-bearing derivative token of ether (ETH) at the core of the exploit.
Aave founder Stani Kulecho announced, 'I'm personally contributing 5,000 ETH to DeFi United as we continue working together with partners.' His personal contribution, valued at roughly $2,346 per ether, is worth $11,730,000. The exploit was traced back to a KelpDAO integration vulnerability with LayerZero, where an attacker minted 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a run on deposits as lenders rushed to exit, ultimately withdrawing $10 billion. The effort to eliminate the bad debt focuses on stabilizing the system with a coordinated bailout to recapitalize rsETH and mitigate losses.
This year's second-largest exploit occurred in late March, when an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature called 'durable nonces.'