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 blockchain analytics firm noted that Mantle and Aave DAO are the largest contributors, collectively raising 55,000 ETH, valued at $127 million. Following a $292 million security breach that left Aave facing a financial crisis, the company joined forces with major crypto firms to launch a coordinated recovery effort, known as DeFi United, aimed at stabilizing DeFi markets.
The initiative, led by Aave service providers, focuses on restoring support for rsETH, a yield-bearing derivative token of ether at the center of the exploit. Aave's founder, Stani Kulecho, personally contributed 5,000 ETH, valued at $11,730,000, to the DeFi United effort.
The exploit, attributed to a KelpDAO integration vulnerability with LayerZero, resulted in the attacker minting 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a significant withdrawal of $10 billion. The primary objective of the bailout is to stabilize the system, recapitalize rsETH, and minimize losses. This incident follows another major exploit 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'.