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 analytics platform noted that the primary contributors, Mantle and Aave DAO, have together contributed $127 million, equivalent to 55,000 ETH.
Following a $292 million security breach that left Aave facing a financial crisis, the company joined forces with major crypto entities to launch a coordinated recovery effort, dubbed DeFi United, aimed at stabilizing DeFi markets. The initiative, led by Aave service providers, seeks to restore support for rsETH, the yield-bearing derivative token of ether at the center of the exploit. Aave founder Stani Kulechov has personally contributed 5,000 ETH, valued at approximately $11,730,000.
The exploit, which originated from a vulnerability in KelpDAO's integration with LayerZero, resulted in the attacker minting 116,500 unbacked rsETH tokens, impairing Aave's collateral and triggering a massive withdrawal of $10 billion. The primary objective of the recovery effort is to stabilize the system through a coordinated bailout, recapitalizing rsETH and mitigating 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'.