Aave, a leading lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the largest DeFi exploit of the year, as reported by Arkham on Saturday. The blockchain analytics platform revealed that the largest contributors to this effort are Mantle and Aave DAO, who together have raised 55,000 ETH, valued at $127 million. Following a $292 million security breach that left Aave facing a financial crisis, the company joined forces with major crypto firms to launch a coordinated recovery effort, dubbed DeFi United, aimed at stabilizing DeFi markets.
Led by Aave service providers, the initiative seeks to restore support for rsETH, the yield-bearing derivative token of ether at the heart 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.
The exploit, which was traced back to 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 massive withdrawal of $10 billion. The primary focus of the effort to eliminate the bad debt is on stabilizing the system through a coordinated bailout, aiming to recapitalize rsETH and mitigate losses. This incident follows the second-largest exploit of the year, which occurred in late March, where an attacker exploited a legitimate feature called 'durable nonces' to drain at least $270 million from the Drift Protocol on Solana.