Aave, a lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the largest decentralized finance exploit of the year, as reported by Arkham on Saturday. The blockchain analytics platform stated, 'AAVE has so far raised $160M to cover the bad debt from the Kelp DAO Exploit, at defiunited.eth. The largest contributors are Mantle and AAVE DAO, who together raised 55,000 ETH or $127M.' Last week, Aave and several prominent crypto firms announced a joint recovery effort, DeFi United, aimed at stabilizing DeFi markets following a $292 million security breach that left the largest lender in the crypto borrowing sector facing a financial crisis.
The effort, led by Aave service providers, seeks to restore support for rsETH, the yield-bearing derivative token of ether at the core of the exploit. Aave founder Stani Kulecho announced his personal contribution of 5,000 ETH to DeFi United, valued at approximately $11,730,000 at the current ether price. The exploit, which originated from a KelpDAO integration vulnerability with LayerZero, allowed an attacker to mint 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and triggering a massive withdrawal of $10 billion.
The bailout effort focuses on stabilizing the system by recapitalizing rsETH and mitigating losses. Earlier this year, the second-largest exploit occurred in late March, when an attacker exploited the Drift Protocol on Solana, draining at least $270 million by abusing a feature called 'durable nonces.'