Aave, a leading lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt stemming from the Kelp DAO exploit, as reported by Arkham on Saturday. The analytics platform noted that the largest contributors to this effort are Mantle and Aave DAO, who together have contributed 55,000 ETH, valued at $127 million. Following a coordinated recovery effort announced last week by Aave and major crypto firms to stabilize DeFi markets after a $292 million security breach, the DeFi United initiative aims to restore support for rsETH, the yield-bearing derivative token of ether at the heart of the exploit.
Aave founder Stani Kulechov has personally contributed 5,000 ETH to DeFi United, valued at approximately $11,730,000 at the current ether price. 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, leaving Aave with impaired collateral and triggering a significant withdrawal of deposits.
The primary objective of the bailout effort is to stabilize the system by recapitalizing rsETH and mitigating losses. This incident follows the second-largest exploit of the year, which occurred in late March when an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature called 'durable nonces'.