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 Arkham on Saturday. The largest donations came from Mantle and Aave DAO, which collectively contributed $127 million, or 55,000 ETH. Following a $292 million security breach that left Aave facing a significant financial crisis, the company joined forces with major crypto firms to launch a coordinated recovery effort, dubbed DeFi United.
This initiative, led by Aave service providers, aims to restore support for rsETH, a yield-bearing ether derivative token at the center of the exploit. Aave founder Stani Kulechov has personally pledged 5,000 ETH, valued at around $11.7 million, to support the cause. The exploit was linked to a vulnerability in KelpDAO's integration with LayerZero, which allowed an attacker to mint 116,500 unbacked rsETH tokens, impairing Aave's collateral and triggering a massive withdrawal of $10 billion.
The primary objective of the bailout is to stabilize the system and mitigate losses by recapitalizing rsETH. This incident is the largest DeFi exploit of the year, surpassing the $270 million drained from the Drift Protocol on Solana in late March.