Aave, a decentralized lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the Kelp DAO exploit, the largest DeFi breach of the year, as reported by Arkham on Saturday. The largest contributors to this effort are Mantle and Aave DAO, who together have raised 55,000 ETH, equivalent to $127 million.
Following a $292 million security breach that left Aave facing a financial crisis, the company joined forces with major crypto firms to launch a coordinated recovery effort, known as DeFi United, aimed at stabilizing DeFi markets. Led by Aave service providers, the initiative seeks to restore support for rsETH, a yield-bearing derivative token of ether at the core of the exploit. Aave founder Stani Kulecho has personally contributed 5,000 ETH, valued at approximately $11,730,000. The exploit, which was caused by 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, aiming to recapitalize rsETH and mitigate losses. This incident follows the second-largest exploit of the year, which 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'.