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 blockchain analytics firm Arkham on Saturday. The firm noted that the largest contributors to this effort are Mantle and Aave DAO, which have collectively raised $127 million, equivalent to 55,000 ETH.
This development follows a coordinated recovery initiative announced by Aave and several major cryptocurrency firms last week, aimed at stabilizing the DeFi market after a significant security breach. The DeFi United effort, led by Aave service providers, focuses on restoring support for rsETH, a yield-bearing derivative token of ether, which was at the center of the exploit. Aave's founder, Stani Kulechov, has personally contributed 5,000 ETH to DeFi United, valued at approximately $11,730,000 at the current ether price. The exploit, linked to a vulnerability in KelpDAO's integration with LayerZero, led to the minting of 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and triggering a significant withdrawal of deposits.
The primary objective of the recovery effort is to stabilize the system through a coordinated bailout, aimed at recapitalizing rsETH and mitigating losses. This incident is the largest DeFi exploit of the year, surpassing the second-largest breach in late March, where an attacker exploited the Drift Protocol on Solana, draining at least $270 million by abusing a legitimate feature.