Aave, a lending platform, has successfully raised approximately $160 million towards covering the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on Saturday. The platform stated, "To date, AAVE has raised $160M to address the bad debt from the Kelp DAO Exploit, facilitated through defiunited.eth. Notably, Mantle and AAVE DAO are the largest contributors, collectively raising 55,000 ETH, equivalent to $127M." Following a $292 million security breach that impacted the DeFi markets, Aave and major crypto firms launched a coordinated recovery effort, DeFi United, led by Aave service providers, aiming to stabilize the markets and restore support for rsETH, a yield-bearing derivative token of ether (ETH) central to the exploit.
Aave's founder, Stani Kulecho, announced a personal contribution of 5,000 ETH to DeFi United, valued at roughly $11,730,000 at the current ether price of $2,346. The exploit, linked to a vulnerability in KelpDAO's integration with LayerZero, allowed an attacker to mint 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and triggering a significant withdrawal of deposits.
The primary objective of the recovery effort is to stabilize the system through a coordinated bailout, focusing on recapitalizing rsETH and mitigating losses. Earlier this year, the second-largest exploit occurred in late March, with an attacker draining at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature called 'durable nonces'.