Aave, a lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the largest decentralized finance exploit of the year, as reported by Arkham on Saturday. The platform stated, "AAVE has so far raised $160M to cover the bad debt from the Kelp DAO Exploit, at defiunited.eth.
The largest contributors are Mantle and AAVE DAO, who together raised 55,000 ETH or $127M." Following a $292 million security breach that left the crypto borrowing sector's largest lender facing a financial crisis, Aave and several major crypto firms launched a coordinated recovery effort, known as DeFi United, to stabilize DeFi markets. The initiative, led by Aave service providers, aims to restore support for rsETH, the yield-bearing derivative token of ether at the core of the exploit.
Aave founder Stani Kulecho announced his personal contribution of 5,000 ETH to DeFi United, valued at $11,730,000 at the current ether price. The exploit, which originated from a KelpDAO integration vulnerability with LayerZero, allowed an attacker to mint 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a massive withdrawal of $10 billion. The bailout effort is focused on stabilizing the system and recapitalizing rsETH to mitigate 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.'