Aave, a 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 stated, '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 collectively raised 55,000 ETH or $127M.' Following a $292 million security breach that left Aave facing a financial crisis, the company and several major crypto firms launched a coordinated recovery effort, DeFi United, to stabilize DeFi markets.
Led by Aave service providers, the initiative aims to restore support for rsETH, the yield-bearing derivative token of ether (ETH) central to the exploit. Aave founder Stani Kulecho is personally contributing 5,000 ETH to DeFi United, valued at roughly $11,730,000 at the current ether price of $2,346.
The exploit was traced to a vulnerability in KelpDAO's integration with LayerZero, where an attacker minted 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and a subsequent $10 billion withdrawal by lenders. The bailout effort focuses on stabilizing the system and mitigating losses by recapitalizing rsETH.