Lending platform Aave has raised approximately $160 million to cover the $200 million in bad debt left by this year’s largest decentralized finance (DeFi) breach, Arkham posted on X on Saturday.
“AAVE has raised $160 million to date to cover bad debt from the Kelp DAO vulnerability on defiunited.eth,” the blockchain analytics platform wrote. “The largest contributors are Mantle and AAVE DAO, who have raised a combined 55,000 ETH, or $127 million.”
Last week, Aave and several major cryptocurrency companies announced coordinated recovery measures to stabilize the DeFi market after a $292 million security breach led to a financial crisis for the cryptocurrency lending industry’s largest lenders.
The project, called DeFi United and led by service provider Aave, aims to restore support for rsETH, the yield-derived token of Ethereum (ETH) at the heart of the exploit.
Aave founder Stani Kulecho said: “As we continue to work with partners, I will personally donate 5,000 ETH to DeFi United.” Based on Ethereum’s current price of approximately $2,346, his personal contribution is worth $11,730,000.
The vulnerability was traced to a KelpDAO integration vulnerability with LayerZero, in which an attacker minted 116,500 unbacked rsETH tokens. This resulted in Aave’s collateral being damaged, triggering a run on deposits, and lenders exiting, eventually withdrawing $10 billion.
Efforts to eliminate bad debt have mainly focused on stabilizing the system through a coordinated bailout to recapitalize rsETH and mitigate losses.
The second largest breach of the year occurred in late March, when attackers stole at least $270 million from the Drift protocol on Solana by abusing a legitimate feature called “persistent random numbers” rather than exploiting coding errors or stolen keys.