Lending platform Aave has raised about $160 million it needs to cover the $200 million in bad debts left by the biggest decentralized finance (DeFi) exploit of the year, Arkham on X posted on Saturday.
“AAVE has so far raised $160 million to cover bad debts related to the Kelp DAO exploit, on defiunited.eth,” the blockchain analytics platform wrote. “The biggest contributors are Mantle and AAVE DAO, who together raised 55,000 ETH, or $127 million.”
Last week, Aave and several major crypto companies announced a coordinated recovery effort to stabilize DeFi markets after a $292 million security breach left the crypto debt industry’s largest lender facing a financial crisis.
Called DeFi United and led by service providers Aave, the goal of the effort is to restore support for rsETH, the yielding ether (ETH) derivative token at the heart of the exploit.
“I am personally contributing 5,000 ETH to DeFi United as we continue to work with partners,” said Aave founder Stani Kulecho. His personal contribution to the current ether price of around $2,346 is worth $11,730,000.
The exploit traces back to a KelpDAO integration vulnerability with LayerZero, where an attacker created 116,500 unbacked rsETH tokens. That left Aave with impaired collateral, triggering a run on deposits as lenders rushed to exit, ultimately withdrawing $10 billion.
Efforts to clear bad debts primarily focus on stabilizing the system with a coordinated rescue plan to recapitalize rsETH and mitigate losses.
The second largest exploit this year took place in late March, when an attacker siphoned at least $270 million from the Drift Protocol on Solana by abusing a legitimate feature called “sustainable opportunities”, rather than exploiting a code bug or stolen keys.
