Aave, a leading lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the year's most significant decentralized finance (DeFi) exploit, as reported by Arkham on Saturday. The platform noted, "AAVE has raised $160M to cover the bad debt from the Kelp DAO Exploit, at defiunited.eth.
The largest contributors, Mantle and AAVE DAO, have together raised 55,000 ETH, valued at $127M." 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, a yield-bearing derivative token of ether (ETH) central to the exploit. Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH to DeFi United, equivalent to approximately $11,730,000 at the current ether price of roughly $2,346. The exploit, linked to a KelpDAO integration vulnerability with LayerZero, allowed an attacker to mint 116,500 unbacked rsETH tokens, impairing Aave's collateral and triggering a massive withdrawal of $10 billion as lenders sought to exit. The primary focus of the bailout effort is to stabilize the system by recapitalizing rsETH and mitigating losses.
Earlier this year, the second-largest exploit occurred in late March when an attacker exploited the Drift Protocol on Solana, draining at least $270 million by abusing the 'durable nonces' feature.