Aave, a lending platform, has successfully raised approximately $160 million to cover the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on X. 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, along with several major crypto firms, launched a coordinated recovery effort called DeFi United to stabilize DeFi markets.
The initiative, led by Aave service providers, aims to restore support for rsETH, the yield-bearing derivative token of ether at the center of the exploit. Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH, worth around $11,730,000, to DeFi United. The exploit, which was caused by a vulnerability in KelpDAO's integration with LayerZero, resulted in the minting of 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a significant withdrawal of deposits. The current effort focuses on stabilizing the system through a coordinated bailout to recapitalize rsETH and mitigate losses.
This incident is not isolated, as the second-largest exploit this year 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'.