Decentralized lending platform Aave has successfully raised approximately $160 million to address the $200 million in bad debt stemming from the Kelp DAO exploit, as reported by blockchain analytics firm Arkham on Saturday. The largest contributors to this effort are Mantle and Aave DAO, who have collectively raised 55,000 ETH, valued at $127 million.
This development follows a coordinated recovery effort, known as DeFi United, aimed at stabilizing the DeFi market after a $292 million security breach left Aave facing a financial crisis. The initiative, led by Aave service providers, seeks to restore support for rsETH, the yield-bearing derivative token of ether at the center of the exploit.
Aave's founder, Stani Kulechov, has personally contributed 5,000 ETH, valued at roughly $11,730,000, to support this cause. The exploit, which originated from a vulnerability in KelpDAO's integration with LayerZero, resulted in the minting of 116,500 unbacked rsETH tokens, impairing Aave's collateral and triggering a massive withdrawal of $10 billion. The current effort focuses on stabilizing the system through a coordinated bailout to recapitalize rsETH and mitigate losses.
This incident is not isolated, as the second-largest exploit this year occurred in late March, with an attacker draining at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature called 'durable nonces'.