Aave, a lending platform, has successfully raised approximately $160 million to mitigate the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on X. The largest contributors, Mantle and Aave DAO, have collectively raised 55,000 ETH, valued at $127 million. Following a $292 million security breach that left Aave facing a financial crisis, the company, along with major crypto firms, launched a coordinated recovery effort called 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 has personally contributed 5,000 ETH, worth around $11,730,000, to DeFi United. The exploit, which was caused by a KelpDAO integration vulnerability with LayerZero, resulted in the minting of 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a massive withdrawal of $10 billion. The current effort focuses on stabilizing the system through a coordinated bailout to recapitalize rsETH and minimize losses.
This incident is the largest DeFi exploit of the year, surpassing the $270 million drained from the Drift Protocol on Solana in late March.