Aave, a lending platform, has successfully raised approximately $160 million to mitigate the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on Saturday. The largest donors, Mantle and Aave DAO, have collectively contributed $127 million, equivalent to 55,000 ETH.
Following a $292 million security breach that left Aave facing a financial crisis, the company, along with several major crypto firms, launched a coordinated recovery effort called DeFi United to stabilize DeFi markets. 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 $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 deposit run. The bailout effort is focused on stabilizing the system and mitigating losses by recapitalizing rsETH.