Decentralized lending platform Aave 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 blockchain analytics platform noted that 'AAVE has so far raised $160M to cover the bad debt from the Kelp DAO Exploit, at defiunited.eth.' Notably, the largest contributors to this effort are Mantle and AAVE DAO, which together have contributed 55,000 ETH, equivalent to $127 million. In response to the recent $292 million security breach, Aave and several prominent crypto firms launched a coordinated recovery initiative, DeFi United, aimed at stabilizing the DeFi markets. Led by Aave service providers, this effort seeks to restore support for rsETH, the yield-bearing derivative token of ether (ETH) at the center of the exploit.
Aave founder Stani Kulecho has personally contributed 5,000 ETH to DeFi United, valued at approximately $11,730,000 at the current ether price of $2,346. The exploit was attributed to a vulnerability in the KelpDAO integration with LayerZero, where an attacker created 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a massive withdrawal of $10 billion. The primary focus of the bailout effort is to stabilize the system by recapitalizing rsETH and minimizing losses. This incident follows the second-largest exploit of the year, which occurred in late March when an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a feature called 'durable nonces.'