Aave, a lending platform, has successfully raised approximately $160 million to mitigate 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, valued at $127M." Following a $292 million security breach that left the crypto borrowing sector facing a financial crisis, Aave and several major crypto firms launched a coordinated recovery effort, dubbed DeFi United, to stabilize DeFi markets. Led by Aave service providers, the initiative aims to restore support for rsETH, the yield-bearing derivative token of ether at the core of the exploit. Aave founder Stani Kulecho announced a personal contribution of 5,000 ETH to DeFi United, valued at approximately $11,730,000 at the current ether price of $2,346.
The exploit was attributed to a KelpDAO integration vulnerability with LayerZero, which allowed an attacker to mint 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and triggering a significant withdrawal of deposits. The primary objective of the bailout effort is to stabilize the system, recapitalize rsETH, and minimize losses. Notably, the second-largest exploit this year occurred in late March, when an attacker exploited the Drift Protocol on Solana, abusing a feature called 'durable nonces' to drain at least $270 million.