Aave, a leading lending platform, has successfully raised around $160 million to address the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on Saturday. The analytics platform noted, 'To date, AAVE has secured $160M to offset the bad debt from the Kelp DAO Exploit, facilitated through defiunited.eth.' It was highlighted that Mantle and AAVE DAO are the largest contributors, collectively raising 55,000 ETH, equivalent to $127 million.
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, DeFi United, aimed at stabilizing DeFi markets. Led by Aave service providers, the initiative focuses on restoring support for rsETH, the yield-bearing derivative token of ether at the core of the exploit.
Aave founder Stani Kulecho personally contributed 5,000 ETH, valued at approximately $11,730,000. The exploit, which originated from a KelpDAO integration vulnerability with LayerZero, led to an attacker minting 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and a subsequent run on deposits. The recovery effort is centered on stabilizing the system through a coordinated bailout, aiming to recapitalize rsETH and mitigate losses. Earlier this year, the second-largest exploit occurred in late March, where an attacker drained at least $270 million from the Drift Protocol on Solana, exploiting a legitimate feature called 'durable nonces'.