Aave, a leading 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 Arkham on Saturday. The largest contributors to this effort are Mantle and Aave DAO, which 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 aims to restore support for rsETH, a yield-bearing derivative token of ether at the core of the exploit. Aave's founder, Stani Kulecho, has personally contributed 5,000 ETH, equivalent to approximately $11,730,000. The exploit, which was traced back to a vulnerability in KelpDAO's integration 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 to recapitalize rsETH and mitigate losses.
This incident follows another significant exploit in late March, where an attacker drained at least $270 million from the Drift Protocol on Solana by exploiting a legitimate feature called 'durable nonces'.