Lending platform Aave has raised about $160 million it needs to cover the $200 million in bad debt left behind by the biggest decentralized finance (DeFi) exploit of the year, Arkham posted on X on Saturday.
“So far, AAVE has raised $160 million to cover bad debt from the Kelp DAO Exploit, on defiunited.eth,” the blockchain analytics platform wrote. “The largest 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 lending sector’s largest lender facing a financial crisis.
Called DeFi United and led by Aave service providers, the goal of the effort is to restore support for rsETH, the ether (ETH)-derived token that drives yield at the core of the exploit.
“I am personally contributing 5,000 ETH to DeFi United as we continue to work together with partners,” said Aave founder Stani Kulecho. Your personal contribution to the current ether price of approximately $2,346 is worth $11,730,000.
The exploit dates back to a KelpDAO integration vulnerability with LayerZero, where an attacker minted 116,500 rsETH tokens without backing. That left Aave with deteriorating collateral, triggering a run on deposits as lenders rushed out and eventually withdrew $10 billion.
The effort to erase bad debt is primarily focused on stabilizing the system with a coordinated bailout 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 Solana’s Drift protocol by abusing a legitimate feature called “durable nonces,” rather than exploiting a code bug or stolen keys.
