Aave, a lending platform, has successfully raised approximately $160 million to mitigate the $200 million in bad debt resulting from the largest DeFi exploit of the year, as reported by Arkham on Saturday. The largest contributors to this effort are Mantle and Aave DAO, who together contributed $127 million, or 55,000 ETH. Following a $292 million security breach that left the largest lender in the crypto borrowing sector facing a financial crisis, Aave and several major crypto firms launched a coordinated recovery effort, known as DeFi United, to stabilize DeFi markets.
Led by Aave service providers, the initiative aims to restore support for rsETH, a yield-bearing derivative token of ether at the core of the exploit. Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH, valued at approximately $11,730,000, to support the effort. The exploit, which was traced back to 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 significant withdrawal of deposits.
The primary focus of the recovery effort is to stabilize the system through a coordinated bailout, aimed at recapitalizing rsETH and minimizing losses. This incident is the largest exploit of the year, surpassing the second-largest exploit, which occurred in late March, where an attacker drained at least $270 million from the Drift Protocol on Solana.