Aave, a prominent lending platform, has successfully raised approximately $160 million to mitigate the $200 million in bad debt resulting from the largest DeFi exploit of the year, as reported by Arkham on Saturday. The analytics platform noted, 'AAVE has raised $160M to address the bad debt from the Kelp DAO exploit, facilitated through defiunited.eth, with Mantle and AAVE DAO being the largest contributors, collectively raising 55,000 ETH or $127M.' Following a $292 million security breach that left the largest DeFi lender facing financial instability, Aave and major crypto firms launched a coordinated recovery effort, DeFi United, to stabilize the DeFi market.
Led by Aave service providers, the initiative aims to restore support for rsETH, the yield-bearing derivative token of ether at the center of the exploit. Aave founder Stani Kulecho has personally contributed 5,000 ETH, valued at roughly $11,730,000, to DeFi United. 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 significant withdrawal of $10 billion. The primary focus of the bailout effort is to stabilize the system and minimize 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.