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 platform stated, 'To date, AAVE has secured $160M to cover the bad debt from the Kelp DAO Exploit, facilitated through defiunited.eth.
The largest contributors, Mantle and AAVE DAO, have collectively raised 55,000 ETH, equivalent to $127M.' Following a $292 million security breach that left Aave facing a financial crisis, the company, along with 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, attributed to a KelpDAO integration vulnerability with LayerZero, involved an attacker minting 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a massive withdrawal of $10 billion. The bailout effort focuses on stabilizing the system by recapitalizing rsETH and mitigating losses. Earlier this year, the second-largest exploit occurred in late March, when an attacker exploited the Drift Protocol on Solana, draining at least $270 million by abusing a feature called 'durable nonces.'