Aave, a lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the year's largest decentralized finance exploit, as reported by Arkham on Saturday. The 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 collectively raised 55,000 ETH, valued at $127M.' Last week, Aave and several prominent crypto firms initiated a coordinated recovery effort, DeFi United, to stabilize DeFi markets following a $292 million security breach that left the largest crypto lender facing a financial crisis. The effort, led by Aave service providers, aims to restore support for rsETH, the yield-bearing derivative token of ether at the core of the exploit.
Aave founder Stani Kulecho personally contributed 5,000 ETH to DeFi United, valued at approximately $11,730,000 at the current ether price. The exploit originated from a vulnerability in KelpDAO's integration with LayerZero, where an attacker created 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and triggering a massive withdrawal of $10 billion. The primary focus of the recovery effort is to stabilize the system through a coordinated bailout, aimed at recapitalizing rsETH and mitigating losses.