The lending platform Aave has successfully raised approximately $160 million, nearing the $200 million required to resolve bad debt stemming from this year’s most significant decentralized finance (DeFi) exploit. Arkham Intelligence reported on X on Saturday that these funds are being gathered at defiunited.eth.
“AAVE have so far raised $160M to cover the bad debt from the Kelp DAO Exploit, at defiunited.eth,” noted the blockchain analytics platform. Mantle and AAVE DAO have emerged as key contributors, amassing 55,000 ETH or roughly $127 million combined.
In response to a $292 million security breach that left Aave, the largest lender in the crypto borrowing sector, in financial jeopardy, Aave, alongside major cryptocurrency firms, launched DeFi United. This coordinated recovery initiative aims to stabilize DeFi markets and restore support for rsETH, an essential yield-bearing derivative token of ether (ETH) that was central to the exploit.
Aave founder Stani Kulecho personally contributed 5,000 ETH to DeFi United, valued at about $11.73 million given Ether’s current price near $2,346. The KelpDAO exploit originated from a vulnerability in its integration with LayerZero, allowing an attacker to mint 116,500 unbacked rsETH tokens. This compromised Aave’s collateral, leading depositors to withdraw approximately $10 billion amid fears of financial instability.
DeFi United’s primary objective is to mitigate the bad debt by stabilizing the system through a coordinated bailout effort designed to recapitalize rsETH and alleviate losses. The second-largest exploit this year occurred in late March when an attacker exploited Drift Protocol on Solana’s ‘durable nonces’ feature, siphoning off at least $270 million without utilizing code bugs or stolen keys.