Lending platform Aave has raised about $160 million it needs to cover the $200 million in bad debt left behind by the year’s largest decentralized finance (DeFi) exploit, Arkham posted on X on Saturday.
“AAVE have so far raised $160M to cover the bad debt from the Kelp DAO Exploit, at defiunited.eth,” the blockchain analytics platform wrote. “The largest contributors are Mantle and AAVE DAO, who together raised 55,000 ETH or $127M.”
Last week, Aave and several major crypto firms announced a coordinated recovery effort to stabilize DeFi markets after a $292 million security breach left the crypto borrowing sector’s largest lender facing a financial crisis.
Called DeFi United and led by Aave service providers, the effort’s goal is to restore support for rsETH, the yield-bearing derivative token of ether (ETH) at the core of the exploit.
“I’m personally contributing 5,000 ETH to DeFi United as we continue working together with partners,” said Aave founder Stani Kulecho. His personal contribution at ether’s current price of roughly $2,346 is worth $11,730,000.
The exploit is traced back to a KelpDAO integration vulnerability with LayerZero, where an attacker minted 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.
The effort to erase the bad debt is focused mostly on stabilizing the system with a coordinated bailout to recapitalize rsETH and mitigate losses.
The second-largest exploit this year took place late March, when an attacker drained at least $270 million from the Drift Protocol on Solana by abusing a legitimate feature called ‘durable nonces,’ rather than exploiting a code bug or stolen keys.
www.coindesk.com
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