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 blockchain analytics platform 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 coordinated recovery effort announced last week, Aave and major crypto firms are working together to stabilize DeFi markets after a $292 million security breach.
The initiative, known as DeFi United, 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, valued at $11,730,000, to support the recovery efforts. The exploit, which was traced back to a vulnerability in KelpDAO's integration with LayerZero, resulted in the minting of 116,500 unbacked rsETH tokens, leaving Aave with impaired collateral and triggering a significant withdrawal of deposits.
The primary focus of the recovery effort is to stabilize the system through a coordinated bailout, aimed at recapitalizing rsETH and mitigating losses. This incident is the largest DeFi exploit of the year, surpassing the $270 million drained from the Drift Protocol on Solana in late March, where an attacker abused a legitimate feature to exploit the protocol.