Aave, a lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the largest decentralized finance exploit of the year, as reported by Arkham on Saturday. The platform stated, "AAVE has raised $160M to cover the bad debt from the Kelp DAO Exploit, at defiunited.eth. The largest contributors are Mantle and AAVE DAO, who together raised 55,000 ETH or $127M." This development follows a coordinated recovery effort announced by Aave and major crypto firms last week to stabilize DeFi markets after a $292 million security breach. The initiative, dubbed DeFi United, aims to restore support for rsETH, the yield-bearing derivative token of ether at the core of the exploit.
Aave's founder, Stani Kulecho, has 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, leaving Aave with impaired collateral and triggering a massive withdrawal of $10 billion. The primary focus of the bailout effort is to stabilize the system and mitigate losses by recapitalizing rsETH.
Earlier this year, the second-largest exploit occurred in late March, when an attacker exploited the 'durable nonces' feature of the Drift Protocol on Solana, draining at least $270 million.