Aave, a leading lending platform, has successfully raised around $160 million to mitigate the $200 million in bad debt stemming from the Kelp DAO exploit, as reported by Arkham on Saturday. The blockchain analytics firm noted that the largest contributors, Mantle and Aave DAO, have together contributed $127 million, equivalent to 55,000 ETH. Following a coordinated recovery effort announced last week, Aave and major crypto firms are working to stabilize DeFi markets after a $292 million security breach. The initiative, known as DeFi United, aims to restore support for rsETH, a yield-bearing derivative token of ether, which was at the center of the exploit.
Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH, valued at approximately $11.73 million. The exploit, resulting from a vulnerability in KelpDAO's integration with LayerZero, led to the minting of 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a significant withdrawal of deposits.
The current effort focuses on erasing the bad debt through a coordinated bailout, aiming to recapitalize rsETH and minimize losses. Notably, this incident follows another major exploit in late March, where an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature.