Aave, a lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on Saturday. The platform stated, "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 $292 million security breach that left Aave facing a financial crisis, the company, along with major crypto firms, launched a coordinated recovery effort called DeFi United to stabilize DeFi markets. The initiative, led by Aave service providers, aims to restore support for rsETH, the yield-bearing derivative token of ether at the center of the exploit.
Aave founder Stani Kulecho has personally contributed 5,000 ETH to DeFi United, valued at roughly $11,730,000. The exploit originated from a vulnerability in KelpDAO's integration with LayerZero, where an attacker minted 116,500 unbacked rsETH tokens, impairing Aave's collateral and triggering a massive withdrawal of $10 billion. The bailout effort focuses on stabilizing the system and mitigating losses by recapitalizing rsETH. 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.'