Aave, a lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the year's largest decentralized finance exploit, as reported by Arkham on Saturday. The blockchain analytics platform noted, "To date, AAVE has raised $160M to cover the bad debt from the Kelp DAO Exploit, via defiunited.eth.
Notably, Mantle and AAVE DAO are the largest contributors, collectively raising 55,000 ETH, equivalent to $127M." Following a $292 million security breach that left the sector's largest lender facing a financial crisis, Aave and major crypto firms launched a coordinated recovery effort to stabilize DeFi markets. Led by Aave service providers, the initiative, known as DeFi United, 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 to DeFi United, valued at approximately $11,730,000 at the current ether price of $2,346. The exploit, linked to a KelpDAO integration vulnerability with LayerZero, involved an attacker minting 116,500 unbacked rsETH tokens, resulting in impaired collateral for Aave and triggering a run on deposits. The bailout effort focuses on stabilizing the system by recapitalizing rsETH and mitigating losses. This incident follows the second-largest exploit this 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'.