Aave, a prominent 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 X. The analytics platform noted that the largest contributors, Mantle and Aave DAO, have collectively raised $127 million, equivalent to 55,000 ETH. This development follows the announcement of a coordinated recovery effort, known as DeFi United, aimed at stabilizing DeFi markets after a significant security breach.
The initiative, led by Aave service providers, seeks to restore support for rsETH, a yield-bearing derivative token of ether. Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH to the cause, valued at approximately $11.73 million at the current ether price.
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 primary objective of the recovery effort is to stabilize the system through a coordinated bailout, aimed at recapitalizing rsETH and minimizing losses.
This incident is the largest DeFi exploit this year, surpassing the second-largest breach, which occurred in late March when an attacker drained at least $270 million from the Drift Protocol on Solana.