Last week, decentralized lending protocol Aave joined forces with several major crypto firms in a joint rescue operation following a DeFi hack that caused roughly $200 million in losses. The attack triggered a rapid exodus of over $10 billion in assets from Aave, sparking market panic.
On-chain analytics platform Arkham reported that the $160 million raised came primarily from the Mantle and Aave communities. Together, the two groups contributed 55,000 ETH, worth around $127 million at current prices. Notably, Aave founder Stani Kulechov personally joined the effort, stating: “As we continue our work with partners, I am personally contributing 5,000 ETH to DeFi United.” That commitment is worth about $11.7 million based on today's ETH price, underscoring strong internal backing for the recovery plan.
Attack Root: KelpDAO-LayerZero Integration Vulnerability
The exploit did not target Aave itself but exploited a vulnerability in KelpDAO's integration with the cross-chain protocol LayerZero. The attacker created 116,500 rsETH tokens—ether-indexed derivatives not backed by real assets. Once the breach was discovered, collateral on Aave became effectively unusable as users rushed to withdraw funds, leading to $10 billion in assets fleeing the protocol.
The central goal of the joint rescue is to eliminate bad debt and restore market stability. A purpose-built fund for the rsETH liquidity issue is expected to help ease panic and support the broader DeFi ecosystem.
Another Major DeFi Exploit This Year
This is not the only significant DeFi incident in 2026. In late March, Solana-based Drift Protocol suffered at least $270 million in losses after an attacker abused a legitimate feature called “durable nonces”, rather than exploiting a software bug or stealing private keys. Both incidents highlight systemic vulnerability and integration risks in decentralized finance.
Experts stress that such major shocks make it imperative for platforms and users to continually update security standards. Pioneering platforms like Aave, backed by strong community support, are now implementing new measures to minimize losses and ensure the long-term sustainability of the DeFi sector.