Aave, a prominent 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 blockchain analytics platform stated, "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 or $127M." This development follows a coordinated recovery effort, known as DeFi United, launched by Aave and major crypto firms to stabilize DeFi markets after a $292 million security breach. Led by Aave service providers, the initiative aims to restore support for rsETH, the yield-bearing derivative token of ether (ETH) central to the exploit.
Aave founder Stani Kulecho has personally contributed 5,000 ETH to DeFi United, valued at $11,730,000 at the current ether price of $2,346. The exploit, linked to a KelpDAO integration vulnerability with LayerZero, resulted in an attacker minting 116,500 unbacked rsETH tokens, impairing Aave's collateral and triggering a massive withdrawal of $10 billion. The bailout effort focuses on stabilizing the system by recapitalizing rsETH and mitigating losses. This incident follows the second-largest exploit this year, which 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.'