Aave, a leading 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 to this effort are Mantle and Aave DAO, who have collectively raised 55,000 ETH, equivalent to $127 million. Following a $292 million security breach that left the DeFi lending sector facing a financial crisis, Aave and major crypto firms launched a coordinated recovery effort, known as DeFi United, to stabilize the markets. The initiative aims to restore support for rsETH, a yield-bearing derivative token of ether, which was at the center of the exploit.
Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH, valued at approximately $11,730,000. The exploit, which was caused by 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 primary focus of the recovery effort is to stabilize the system through a coordinated bailout, recapitalizing rsETH and minimizing losses. This incident is the largest DeFi exploit of the year, surpassing the $270 million drained from the Drift Protocol on Solana in late March, which was perpetrated by abusing a legitimate feature called 'durable nonces'.