Aave, a leading lending platform, has successfully raised approximately $160 million to mitigate the $200 million in bad debt resulting from the year's most significant DeFi exploit, as reported by Arkham on Saturday. The analytics platform stated, 'To date, 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 collectively raised 55,000 ETH, valued at $127M.' Following a coordinated recovery effort announced last week, Aave and major crypto firms are working together to stabilize DeFi markets after a $292 million security breach.
The initiative, known as DeFi United, aims to restore support for rsETH, the yield-bearing derivative token of ether at the center of the exploit. Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH, valued at $11,730,000.
The exploit, which occurred due to a vulnerability in KelpDAO's integration with LayerZero, resulted in the minting of 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a significant withdrawal of deposits. The current effort focuses on stabilizing the system through a coordinated bailout, aiming to recapitalize rsETH and minimize losses. This incident follows the second-largest exploit of the year, which occurred in late March when an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature.