Aave has already pulled in roughly $160 million — about 80% of a $200 million goal — to plug bad debt stemming from this year’s largest DeFi exploit, blockchain analytics firm Arkham reported on X on Saturday.
Arkham said the bulk of the funds came from Mantle and AAVE DAO, which together contributed roughly 55,000 ETH (about $127 million). The fundraising is part of a broader, coordinated recovery initiative called DeFi United, led by Aave service providers and other major crypto firms, created last week to stabilize markets after a massive security breach.
What happened
The crisis began when a vulnerability in a KelpDAO integration with LayerZero allowed an attacker to mint 116,500 unbacked rsETH tokens. rsETH is a yield-bearing derivative pegged to ether (ETH). The newly minted, uncollateralized tokens impaired Aave’s collateral base and triggered a panic: lenders rushed to withdraw, pulling some $10 billion and leaving Aave facing an estimated $292 million hole.
The response
DeFi United’s stated aim is to recapitalize rsETH and erase the bad debt so the broader lending market can stabilize. Aave founder Stani Kulechov personally pledged 5,000 ETH to the effort — about $11.73 million at ETH ≈ $2,346 — and other large contributors are filling the gap as the coalition works toward the $200 million target.
Context
The KelpDAO incident is the largest DeFi exploit recorded this year. A separate high-profile attack in late March drained at least $270 million from Drift Protocol on Solana by abusing a protocol feature called “durable nonces,” rather than exploiting a code bug or stolen keys — underscoring that complex integrations and design choices remain major risk vectors across DeFi.
What to watch
Whether DeFi United can fully recapitalize rsETH and restore confidence will be critical for Aave and the broader lending market. The coalition’s next steps, timing for any recapitalization mechanics, and final contributions to reach the $200 million goal will determine how quickly the sector can move past the shock.
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