Aave, a leading lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on Saturday. The largest contributors to this effort are Mantle and Aave DAO, which have collectively raised 55,000 ETH, valued at $127 million.
Following a $292 million security breach that left Aave facing a financial crisis, the company joined forces with major crypto firms to launch a coordinated recovery effort, known as DeFi United, aimed at stabilizing DeFi markets. The initiative, led by Aave service providers, focuses on restoring support for rsETH, the yield-bearing derivative token of ether at the center of the exploit. Aave founder Stani Kulechov has personally contributed 5,000 ETH to DeFi United, valued at approximately $11,730,000.
The exploit, which was traced back to a vulnerability in KelpDAO's integration with LayerZero, resulted in the minting of 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a massive withdrawal of $10 billion. The current effort is centered on stabilizing the system through a coordinated bailout to recapitalize rsETH and mitigate losses. This incident is the largest DeFi exploit of the year, surpassing the $270 million drained from the Drift Protocol on Solana in late March, which was carried out by abusing a legitimate feature called 'durable nonces'.