Aave, a lending platform, has successfully raised approximately $160 million to mitigate the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on Saturday. The largest contributors, Mantle and Aave DAO, have together raised 55,000 ETH, equivalent to $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, known as DeFi United, to stabilize DeFi markets. The initiative aims to restore support for rsETH, a yield-bearing derivative token of ether at the core of the exploit.
Aave founder Stani Kulecho has personally contributed 5,000 ETH, valued at around $11,730,000, to DeFi United. The exploit, which was caused by a KelpDAO integration vulnerability with LayerZero, resulted in an attacker minting 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 minimize losses.
This incident is not isolated, as the second-largest exploit this year occurred in late March, when an attacker exploited the Drift Protocol on Solana, draining at least $270 million by abusing a legitimate feature.