The Solana Foundation has announced a significant intervention in the DeFi ecosystem, providing USDT liquidity to the Aave platform for the first time in response to a major exploit. The incident, which occurred on April 18, involved the KelpDAO infrastructure and resulted in approximately $190 million in withdrawals from Aave, exposing the protocol to substantial bad debt.
Lily Liu, President of the Solana Foundation, stated that the decision to lend USDT from the foundation's treasury was driven by a commitment to the overall health of the DeFi ecosystem. "Economies are not isolated. For Solana to be healthy, all of DeFi needs to be healthy," Liu emphasized. She noted that the foundation has a history of deploying capital within Solana-based DeFi systems but recognized the necessity of broader ecosystem stability.
The exploit allowed attackers to mint unbacked rsETH tokens by exploiting a misconfiguration in LayerZero's verification system. These tokens were then deposited as collateral on Aave, enabling the withdrawal of nearly $190 million in real assets. Estimates of bad debt range from $124 million to over $230 million, depending on how liabilities are distributed among affected users.
In response to the crisis, a large-scale rescue initiative called "DeFi United" has been launched. More than $230 million has been raised to compensate affected rsETH holders, with contributions from Arbitrum DAO, Mantle, and Aave DAO, which together pledged over 85,000 ETH. Aave founder Stani Kulechov personally committed 5,000 ETH. The Solana Foundation's USDT loan adds crucial liquidity support during these ongoing recovery measures, though the loan terms and exact amount remain undisclosed.
Additionally, Liu confirmed plans to bring the AAVE token to the Solana network this weekend, marking a further step in cross-ecosystem collaboration. The Solana Foundation had previously supported Tether’s recovery plan for the Drift protocol before this move.
