Babylon Foundation injects 3 million USDT into Aave, reinvesting the interest back into the ecosystem

According to an official announcement posted by Babylon Foundation on X on April 27, the foundation said it would deposit $3 million worth of USDT into Aave, including $2 million allocated to Aave V3 and $8B allocated to Aave V4, aiming to express support for Aave and the DeFi ecosystem.

Babylon Foundation Official Statement

According to the announcement posted by Babylon Foundation on X on April 27, the foundation directly quoted: “Babylon brings native Bitcoin into DeFi, and bringing more Bitcoin into DeFi means providing support during difficult times. The Babylon Foundation will deposit $3 million in USDT into Aave, with $2 million allocated to V3 and $31M allocated to V4, as a way to express our support and confidence in Aave. We believe that DeFi is a core component of the modern financial system. This means that when the ecosystem needs it, we will compete with it, build it together, and move forward hand in hand.”

Status of Aave Recovery Fundraising

Based on data from blockchain analytics firm Arkham, Aave has raised over $160 million to cover most of the losses in the $200 million bad debt caused by the KelpDAO vulnerability. Arkham’s data shows that the main sources of the raised funds are the Mantle community and the Aave community; together, they donated 55,000 ETH, which was worth approximately $127 million based on market prices at the time.

In a public statement, Aave founder Stani Kulechov was quoted as saying: “While we continue to work alongside our partners, I personally will donate 5,000 ETH to DeFi United.” Based on ETH market prices, the current value of Kulechov’s personal donation is approximately $11.7 million.

Technical Background of the KelpDAO Vulnerability

According to a publicly available technical report, this attack exploited a vulnerability in the KelpDAO and LayerZero integration. The attacker created 116,500 rsETH tokens (a derivative token pegged to Ethereum), but these tokens were not backed by real assets. After the vulnerability was disclosed, community members quickly withdrew funds, causing the relevant collateral on Aave to become unusable. Approximately $10 billion in assets flowed out of the protocol, and the size of the bad debt is estimated at $200 million.

Drift Protocol March Vulnerability Incident

According to public reports, at the end of March 2026, Drift Protocol on the Solana ecosystem suffered a vulnerability attack. The attacker abused a legitimate feature called “durable nonce,” resulting in losses of at least $270 million.

Frequently Asked Questions

What is the specific allocation and funding mechanism for Babylon Foundation’s injection of funds into Aave?

According to Babylon Foundation’s official announcement from April 27, the foundation deposited $3 million in USDT into Aave, with $2 million allocated to Aave V3 and $31M allocated to Aave V4. The interest generated by the deposit will be returned to the Aave ecosystem through the incentive mechanism enabled by the Aave x Babylon integration.

How much recovery funding did Aave raise after the KelpDAO vulnerability?

According to Arkham data, Aave has raised over $160 million, mainly from 55,000 ETH (about $127 million) jointly donated by the Mantle and Aave communities, as well as from the 5,000 ETH (about $11.7 million) personal donation made by Aave founder Stani Kulechov.

What were the technical reasons behind the KelpDAO vulnerability, and what impact did it have on Aave?

According to the publicly available technical report, the attacker exploited a vulnerability in the KelpDAO and LayerZero integration to create 116,500 rsETH tokens that lacked asset backing. After the vulnerability was disclosed, about $10 billion in assets flowed out of the Aave protocol, and the size of the bad debt is estimated to reach $200 million.