Aave, a leading lending platform, has successfully raised approximately $160 million to mitigate the $200 million in bad debt resulting from the largest DeFi exploit of the year, as reported by blockchain analytics firm Arkham on Saturday. The largest contributors to this effort are Mantle and Aave DAO, who together have contributed 55,000 ETH, valued at $127 million. Following a $292 million security breach that left Aave facing a financial crisis, the company and several major crypto firms launched 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 (ETH) at the center of the exploit.
Aave founder Stani Kulechov has personally contributed 5,000 ETH, equivalent to $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 current effort focuses on stabilizing the system through a coordinated bailout, aimed at recapitalizing rsETH and minimizing losses. This incident follows the second-largest exploit of the year, which occurred in late March, where an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature called 'durable nonces'.