Aave, a prominent lending platform, has successfully raised approximately $160 million to compensate for the $200 million in debt resulting from the Kelp DAO exploit, as reported by Arkham on Saturday. The blockchain analytics platform stated, "To date, AAVE has raised $160M to offset the bad debt from the Kelp DAO Exploit, via defiunited.eth. Key contributors include Mantle and AAVE DAO, who collectively contributed 55,000 ETH, worth $127M." Last week, Aave and several major cryptocurrency firms launched a coordinated recovery effort, dubbed DeFi United, to stabilize DeFi markets following a $292 million security breach that left the largest lender in the crypto borrowing sector facing a financial crisis. Led by Aave service providers, the initiative aims to restore support for rsETH, the yield-bearing derivative token of ether at the core of the exploit.
Aave founder Stani Kulecho announced, "I am personally contributing 5,000 ETH to DeFi United as we continue to collaborate with partners." With ether's current price of approximately $2,346, his contribution is valued at $11,730,000. The exploit was linked to a vulnerability in KelpDAO's integration with LayerZero, where an attacker created 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a massive withdrawal of $10 billion.
The primary focus of the bailout effort is to stabilize the system by recapitalizing rsETH and mitigating losses. Earlier this year, the second-largest exploit occurred in late March, when an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature called 'durable nonces'.