Aave, a leading 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 Saturday. The blockchain analytics platform noted that the largest contributors to this effort are Mantle and Aave DAO, who together have contributed 55,000 ETH, valued at $127 million. This development comes on the heels of a coordinated recovery initiative, dubbed DeFi United, aimed at stabilizing DeFi markets following a $292 million security breach.
The effort, led by Aave service providers, seeks 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 approximately $11,730,000, to DeFi United. The exploit, which originated from a vulnerability in KelpDAO's integration with LayerZero, resulted in the minting of 116,500 unbacked rsETH tokens, ultimately leaving Aave with impaired collateral and triggering a significant withdrawal of $10 billion. The primary focus of the bailout effort is to stabilize the system, recapitalize rsETH, and minimize losses.
This incident is the largest DeFi exploit of the year, surpassing the second-largest breach, which occurred in late March when an attacker drained at least $270 million from the Drift Protocol on Solana.