Aave Leads DeFi Bailout to Mitigate Losses Following $292 Million Exploit on KelpDAO

BlockBeats News, April 24, Aave, in collaboration with multiple institutions, launched the "DeFi United" rescue plan to address the approximately $292 million loss caused by the KelpDAO exploit and prevent insolvency contagion.

The attack originated from a LayerZero integration vulnerability, where the hacker minted uncollateralized rsETH and borrowed around $190 million worth of assets on Aave, leading to collateral distortion and triggering a run on the platform, causing the TVL to temporarily drop by around $10 billion.

Currently, Lido Finance, EtherFi, and founder Stani Kulechov have proposed funding solutions; Arbitrum has frozen some funds, while the remaining assets have been transferred via THORChain, making recovery challenging. The current focus is on a collaborative funding effort to "patch the hole" and stabilize the DeFi lending system.