Aave, a prominent lending platform, has successfully raised around $160 million to address the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on Saturday. The platform noted, 'So far, 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 impacted the DeFi markets, Aave and several major crypto firms launched a coordinated recovery effort called DeFi United. Led by Aave service providers, the initiative aims to restore support for rsETH, the yield-bearing derivative token of ether (ETH) central to the exploit.
Aave's founder, Stani Kulecho, announced a personal contribution of 5,000 ETH to DeFi United, equivalent to approximately $11,730,000 at the current ether price. The exploit, traced back to a KelpDAO integration vulnerability with LayerZero, led to the minting of 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and triggering a significant withdrawal of deposits.
The primary focus of the bailout effort is to stabilize the system, recapitalize rsETH, and mitigate losses. Earlier this year, the second-largest exploit occurred in late March, where an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature called 'durable nonces.'