Aave, a prominent lending platform, has successfully raised approximately $160 million to cover the $200 million in bad debt resulting from the largest decentralized finance exploit of the year, as reported by Arkham on Saturday. The blockchain analytics platform noted that the largest contributors to this effort are Mantle and Aave DAO, who together have raised 55,000 ETH, valued at $127 million.
This development comes after Aave and several major cryptocurrency firms launched a coordinated recovery effort, dubbed DeFi United, to stabilize DeFi markets following a $292 million security breach. The initiative, led by Aave service providers, aims to restore support for rsETH, a 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, 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 primary focus of the effort to eliminate the bad debt is on stabilizing the system through a coordinated bailout to recapitalize rsETH and mitigate losses. This incident is the largest exploit of the year, surpassing the second-largest exploit in late March, where an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature called 'durable nonces'.