Aave, a lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on X. The largest contributors, Mantle and AAVE DAO, have together contributed 55,000 ETH, valued at $127 million. This development follows a coordinated recovery effort announced by Aave and major crypto firms last week, aiming to stabilize DeFi markets after a $292 million security breach.
The initiative, known as DeFi United, seeks to restore support for rsETH, the yield-bearing derivative token of ether (ETH) at the center of the exploit. Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH, equivalent to $11,730,000 at the current ether price.
The exploit, which originated from a KelpDAO integration vulnerability with LayerZero, led to the minting of 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and a subsequent run on deposits. The primary focus of the effort to eliminate the bad debt is on stabilizing the system through a coordinated bailout to recapitalize rsETH and mitigate losses.