Aave, a lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the largest decentralized finance exploit of the year, as reported by Arkham on Saturday. The blockchain analytics platform noted, "Aave has raised $160M to cover the bad debt from the Kelp DAO exploit, via defiunited.eth, with Mantle and Aave DAO being the largest contributors, collectively raising 55,000 ETH or $127M." Following a $292 million security breach that left Aave facing a financial crisis, the company and major crypto firms launched a coordinated recovery effort, known as DeFi United, to stabilize DeFi markets. Led by Aave service providers, the initiative aims to restore support for rsETH, the yield-bearing derivative token of ether at the core of the exploit.
Aave's founder, Stani Kulecho, 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 KelpDAO's integration with LayerZero, where an attacker minted 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a significant withdrawal of deposits. The bailout effort is focused on stabilizing the system and mitigating losses by recapitalizing rsETH. Earlier this year, the second-largest exploit 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'.