Lending platform Aave has raised about $160 million, which it needs to cover the $200 million in bad debt left behind by the year’s biggest decentralized finance (DeFi) exploit, Arkham wrote on X Saturday.
“AAVE has so far raised $160 million to cover the bad debt of the Kelp DAO Exploit on defiunited.eth,” the blockchain analytics platform wrote. “The biggest contributors are Mantle and AAVE DAO, which 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-lending sector’s largest lender in a financial crisis.
Called DeFi United and led by Aave service providers, the effort aims to restore support for rsETH, the dividend-bearing derivative token of ether (ETH) 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 ether’s current price of about $2,346 is worth $11,730,000.
The exploit traces 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 close, ultimately withdrawing $10 billion.
Efforts to erase the bad debt are mainly 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 drained at least $270 million from the Drift protocol on Solana by abusing a legitimate feature called ‘durable nonces’ instead of exploiting a code bug or stolen keys.
