Decentralized lending platform Aave has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by Arkham on Saturday. The platform noted, 'To date, 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, equivalent to $127M.' Following a $292 million security breach, Aave and prominent 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 at the center of the exploit. Aave founder Stani Kulecho personally contributed 5,000 ETH, valued at around $11,730,000.
The exploit, which originated from a KelpDAO integration vulnerability with LayerZero, resulted in the attacker minting 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, aiming to recapitalize rsETH and mitigate losses.