Aave, a lending platform, has successfully raised approximately $160 million to address the $200 million in bad debt resulting from the Kelp DAO exploit, as reported by blockchain analytics firm Arkham on Saturday. The largest contributors to this effort are Mantle and Aave DAO, who together have contributed $127 million, equivalent to 55,000 ETH. This development comes after Aave and major crypto firms launched a coordinated recovery initiative, known as DeFi United, to stabilize DeFi markets following a $292 million security breach. The goal of DeFi United, led by Aave service providers, is 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, valued at roughly $11,730,000, to DeFi United. The exploit, which originated from a vulnerability in KelpDAO's integration with LayerZero, led to the minting of 116,500 unbacked rsETH tokens, impairing Aave's collateral and triggering a massive withdrawal of $10 billion.
The ongoing effort to eliminate the bad debt focuses on system stabilization through a coordinated bailout, aiming to recapitalize rsETH and mitigate losses. Earlier this year, the second-largest exploit 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'.