Aave, a lending platform, has successfully raised approximately $160 million to cover the $200 million in bad debt resulting from the largest DeFi exploit of the year, as reported by Arkham on X. The blockchain analytics platform noted that the largest contributors, Mantle and Aave DAO, have together raised $127 million, equivalent to 55,000 ETH. This development comes after Aave and major crypto firms launched a joint recovery effort, known as DeFi United, to stabilize DeFi markets following a $292 million security breach.
The initiative aims to restore support for rsETH, a yield-bearing derivative token of ether, which was at the center of the exploit. Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH, valued at around $11,730,000, to support the effort. The exploit, which was caused by a vulnerability in KelpDAO's integration with LayerZero, resulted in the attacker minting 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a significant withdrawal of deposits.
The current focus is on erasing the bad debt through a coordinated bailout to recapitalize rsETH and minimize losses.