[ARFC] rsETH Incident Funding Update

[TokenLogic]

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title: [ARFC] rsETH Incident Funding Update
author: @TokenLogic
created: 2026-04-24

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Summary

This publication presents to the Aave community, for discussion and vote, a proposal to have the Aave DAO provide financial assistance to restore the backing of Kelp DAO’s rsETH product following the April 18, 2026, bridge incident.

The Aave DAO’s participation forms part of a broader DeFi United recovery effort with ecosystem partners aimed at the orderly resolution of the rsETH backing shortfall. Early contributors to DeFi United include EtherFi, Lido, Mantle, Stani, Ethena, Ink Foundation / Tydro, Golem Foundation and Golem Project, Emilio, BGD Labs, Ernesto with more to come soon.

Further communication regarding the financial implications of this contribution to restoring rsETH users will be shared once the coordinated recovery plan has progressed further.

Motivation

Overview

On April 18, 2026, a vulnerability enabled an unauthorised release of rsETH from the Ethereum LayerZero adapter, breaking the cross-chain backing invariant between locked Ethereum collateral and remote-chain mints. A detailed account of the incident, the attacker’s on-chain footprint, and the resulting bad-debt scenarios is available in the rsETH Incident Report and in LlamaRisk’s follow-up analysis,.

Aave DAO service providers and other ecosystem participants are coordinating a recovery effort (called “DeFi United”) intended to close the remaining ETH backing shortfall and protect affected users across the Aave V3 deployments where rsETH and wrsETH were listed. This proposal is limited to the Aave DAO’s component of that effort.

No Ghost Left Behind

Aave has a long-standing commitment to protecting users during systemic events. Following the 2022 CRV short-squeeze incident, which resulted in 2,651,906 CRV of bad debt, which at the time represented roughly $1.9M, the DAO moved to cover the shortfall rather than socialise losses with suppliers. This proposal continues that posture.

The Aave DAO balance sheet is well-positioned to participate in a coordinated response. Participation supports the integrity of the Aave V3 markets affected by the incident (Ethereum, Arbitrum, Mantle), preserves depositor confidence in the WETH and LST markets, and demonstrates the DAO’s willingness to absorb a systemic event of this nature.

Recovery Effort

This ARFC lays out a credible path to making affected users whole, but it is important that the DAO approaches it with open eyes. The recovery depends on actions by parties outside the coalition’s control, including Kelp reopening withdrawals, LayerZero reopening the bridge, the Arbitrum Security Council, the Aave and Compound liquidation markets, that could play out over the coming weeks. The DeFi United coalition has assembled the best plan available with the information at hand, and the numbers in this document reflect the central case. They are not guaranteed. This is a call to arms: if each of the external pieces lands as expected, the outcome is a full make-whole of users with limited long-term exposure for the DAO, but the path there is not risk-free.

According to the Llamarisk report, the exploit resulted in the extraction of 152,577 rsETH from the LayerZero lockbox. At the prevailing ratio of 1.0696 rsETH per ETH, this represents an original shortfall of approximately 163,183 ETH. Coordinated action by multiple parties across the ecosystem has since reduced the outstanding gap materially:

• Kelp recovered and froze 40,373 rsETH, equivalent to approximately 43,168 ETH at the reference ratio. Following this action, the immediate hole stands at approximately 120,015 ETH.
• The Arbitrum Security Council successfully froze 30,766 ETH that the hacker was still holding on Arbitrum.
• The hacker’s remaining position on Aave can be liquidated. The delta between collateral and debt represents an expected recovery of up to 12,323 WETH.
• On the same basis, the hacker’s position on Compound yields an additional 1,845 WETH.

Combined, these four streams represent approximately 87,955 ETH of recovered or recoverable funds, equivalent to roughly 54% of the original shortfall. The residual funding gap that the coalition needs to bridge is therefore approximately 75,081 ETH.

Of the four recovery streams, only the Kelp freeze is immediately deployable as rsETH backing. The remaining streams, such as the Arbitrum Security Council release and the liquidation of the hacker’s positions on Aave and Compound, are recoverable in substance but not yet liquid, and could take several weeks.

Current Funding and Treasury Ask

The 75,081 ETH residual gap is being addressed through a combination of public contributions, a credit facility from Mantle, and a targeted contribution from the Aave DAO treasury. To date, EtherFi, Lido, Ethena, Ink, BGD Labs, Ernesto, Emilio, and Stani have committed contributions totalling 14,570 ETH, with conversations ongoing with additional ecosystem partners and further pledges expected in the coming hours. Alongside these, Mantle has committed a credit facility of up to 30,000 ETH to the coalition. Taken together with donations currently under discussion, the residual gap narrows to approximately 30,000 ETH. This ARFC requests authorization to deploy 25,000 from the Aave DAO treasury as the DAO’s contribution to the broader coalition effort, alongside the other funding streams already in place.

The 25,000 ETH treasury contribution is anchored: any additional public donations received after approval will not reduce the DAO’s commitment; instead, they will be applied to repay Mantle, reducing Aave’s aggregate exposure to external creditors rather than recalibrating the treasury outlay. This anchoring is deliberate. The DeFi United coalition must act immediately to make users whole, and indexing the treasury figure to a still-moving donation total would introduce delay and ambiguity at a moment that requires neither. Directing later contributions to the private loans principal further reduces the DAO’s indirect obligations once the recovery is complete, strengthening Aave’s balance sheet on the other side.

While the table above sets out the permanent funding stack against the 75,228 ETH residual gap, the coalition must in practice place the full 120,015 ETH into the LayerZero lockbox in order to execute the recovery, with the exact process and subsequent steps to be determined with the relevant parties. Approximately 44,787 ETH of that upfront amount corresponds to secured recoveries that are not yet liquid, namely the Arbitrum Security Council release and the Aave and Compound hacker position liquidations, and the conversion of those amounts into deployable ETH remains subject to timelines and processes outside the coalition’s control. To bridge this window, a separate tranche of short-duration loans is being arranged with additional ecosystem partners. Should those recoveries be delayed or ultimately fall short of the expected figures, the life of these loans would extend accordingly.

As recovery flows arrive at different times and with varying degrees of certainty, the coalition commits to returning to the DAO as each tranche materialises. Incoming proceeds will be applied first to the short-duration bridge loans and then to the longer-term facilities, in accordance with the repayment waterfall described above. The DAO will receive transparent accounting of each recovery event and the corresponding reduction in outstanding obligations, with a follow-up governance process initiated if the evolving structure warrants one. In the interim, continued fundraising from ecosystem partners remains an active coalition priority Every additional donation secured directly reduces the debt the DAO carries through the credit facilities and, by extension, the long-term load on Aave’s balance sheet. This ARFC authorises the initial capital commitment and establishes the DAO’s ongoing oversight of the recovery.

Specification

Voluntary Donation

The Aave DAO approves making the following funds available as a Donation from the treasury to support rsETH backing recovery, subject to the finalisation of the broader ecosystem’s DeFi United recovery plan.

Recovery Effort

This proposal authorises Aave Labs (or a designated affiliate acceptable to Aave Labs and the DAO) to act as counterparty on any loan, settlement, indemnity or related legal instrument on behalf of the Aave DAO, solely for the purpose of executing the recovery plan referenced above.

Supporting the recovery plan is anticipated to involve, but not be limited to, providing collateral such as Aave DAO assets and future Aave Protocol revenue, to secure various funding arrangements, such as under-collateralised loans, warrants, and potential token sales. To facilitate entering into such arrangements, assets held by the Aave DAO across SAFEs and Ecosystem Reserve are to be made available as and when required.

Refined figures, the asset composition of the contribution, the payment schedule, and any associated counterparty and indemnity terms will be disclosed in a subsequent publication to the DAO once the coordinated recovery plan has progressed further.

Approval

If approved by AAVE token holders via Snapshot vote, Aave DAO representatives shall make the stated funds available for the intended purpose and authorise Aave Labs (or a designated affiliate acceptable to both Aave Labs and the DAO) to secure funding on behalf of the Aave DAO exclusively for the purpose of orderly resolution of the rsETH backing shortfall, including remediating bad debt and restoring the health and normal functioning of affected markets, and facilitating any future restructuring of those facilities.

That authority is subject to defined limits. Aggregate borrowing across all rescue lenders is capped at a maximum amount reflecting the residual funding gap. The revenue share directed to repayment will not exceed a pre-defined percentage of total Aave protocol revenue, as determined by Aave service providers, applied on full drawdown and directed onchain to dedicated repayment contracts. The repayment term for each drawdown is subject to a maximum duration from the applicable drawdown date, with the option to refinance respective facilities at a later date.

Disclaimer

TokenLogic is an active service provider to the Aave DAO, the beneficiary of stream 100072 and the KPI as outlined in this publication. The scope of this engagement is available via this forum proposal.

TokenLogic supports and maintains an independent delegate voting platform within the Aave community.

TokenLogic and associated entities have no undisclosed material conflicts of interest at the time of submission.

Next Steps

1. Gather feedback from the community.
2. If consensus is reached on this ARFC, escalate this proposal to the Snapshot stage.
3. If Snapshot outcome is YAE, escalate this proposal to the AIP stage.

Copyright

Copyright and related rights waived via CC0.

[TamasXin]

I don’t know what the negotiation positions were, but I don’t feel it’s entirely fair that AAVE is taking on such a large share of the problem-solving. At the same time, I find the financial contribution from those who caused the problem to be insufficient. It is sad to see AAVE’s future being consumed by its negligent clients.

[abpiv]

Seconded.
This is the only path.

[robtg4]

I want to start by acknowledging the DeFi United coalition effort. The speed of coordination — EtherFi, Lido, Mantle, Ethena, BGD Labs, Ink, Golem, and individual contributors pulling together 14,570 ETH in pledges within days — is genuinely impressive and demonstrates something the industry rarely shows: collective responsibility. That matters.

But I have a fundamental problem with this proposal as structured: it asks the DAO to commit 25,000 ETH to make users whole without requiring, as a precondition, any systemic reform to prevent the exact same failure from recurring. The rsETH incident was not a black swan. It was a predictable consequence of accepting collateral that never should have been listed at the parameters it carried. Funding the recovery without fixing the intake process is paying the bill and leaving the kitchen on fire.

The Recovery Math Is Sound. The Governance Sequence Is Backwards.

Let me be clear on what I’m not disputing. The arithmetic is clean. 163,183 ETH original shortfall. 87,955 ETH recovered or recoverable (Kelp freeze, Arbitrum Security Council, hacker position liquidations). 75,081 ETH residual gap. The waterfall structure — donations first, Mantle credit facility second, DAO treasury third — is the right priority ordering. The anchoring of the 25,000 ETH commitment (fixed regardless of later donations, with additional funds retiring the Mantle facility) is operationally smart and avoids the paralysis of constantly recalculating the ask.

What I’m disputing is the sequence. This ARFC should not go to Snapshot until Aave governance has adopted a binding collateral risk assessment framework that would have prevented rsETH from being listed at 93% LTV in the first place.

Why rsETH Should Never Have Been Listed at Those Parameters

The rsETH exploit originated in a 1-of-1 DVN LayerZero bridge configuration. That’s not a novel attack vector — it’s the textbook single-point-of-failure that every infrastructure risk assessment should flag on day one. Let me walk through what a proper collateral evaluation would have surfaced:

• Redemption Posture: rsETH on L2 was bridge-gated. Users couldn’t redeem directly to ETH without routing through the LayerZero adapter. That’s the highest-risk redemption category — no independent exit path. Score: maximum risk.
• Rehypothecation Depth: rsETH is already one layer deep (ETH → staking → liquid restaking token). Bridged rsETH on L2 adds another (bridge-wrapped LRT). Each layer multiplies independent failure vectors. Combined failure probability is multiplicative, not additive.
• Bridge Hops in Provenance: The Unichain → Ethereum route used a 1-of-1 DVN with no optional verifiers. The entire bridge security model reduced to one entity. This alone should have capped the asset at isolated-supply-only with maximum 50% LTV. Instead, it was accepted at 93% LTV on Core.
• Oracle Fragility: The price feed ultimately depended on rsETH’s internal exchange rate, which itself depended on the bridge invariant holding. When the bridge invariant broke, the oracle became a liar — quoting a price that assumed backing that no longer existed.
• Liquidity Depth: rsETH on L2s had thin DEX liquidity relative to the supply caps Aave accepted. Liquidators in a depeg scenario would have moved the price against themselves trying to clear positions — exactly what the bad debt scenarios in the Incident Report model.

Run those five factors through any structured evaluation and the output is clear: rsETH on L2 was a Tier 4 collateral asset at best— suitable only for isolated supply caps at ≤50% LTV. Listing it at 93% LTV on Core was a risk management failure, full stop. The 25,000 ETH this proposal requests is the direct financial consequence of that failure.

What the DAO Should Require Before Releasing Funds

I’m not arguing against the recovery. I’m arguing for conditionality. Before this ARFC moves to Snapshot, governance should adopt a structured asset safety tiering framework with the following properties:

1. Independent Factor Scoring. Every collateral asset evaluated across independent risk dimensions — redemption posture, derivative depth, bridge infrastructure, regulatory status, oracle design, volatility, liquidity depth, and (for time-bound instruments) duration risk. Each factor scored independently. No composite weighting that lets a good score in one dimension mask a critical failure in another. The entire rsETH disaster traces to a composite scoring system that let “good backing ratio” mask “catastrophic bridge infrastructure.”

2. Tier-Gated LTV Limits. Each tier maps to a maximum LTV. Assets with structural risk clusters (bridge-dependent, oracle-fragile, deep rehypothecation chains) are hard-capped at tier-appropriate LTVs that cannot be overridden by governance vote without explicit risk acceptance documentation. The 93% LTV on rsETH was not a calculated risk — it was an uncalculated one.

3. Automated Tier Degradation. When an asset’s underlying risk factors change — a bridge configuration weakens, oracle infrastructure degrades, liquidity thins — the tier should degrade automatically, triggering LTV reductions through the Risk Steward without waiting for a governance cycle. The Automated Supply Cap Updater currently in Temp Check addresses one dimension of this (supply concentration). Tier degradation addresses the collateral quality dimension.

4. Mandatory Infrastructure Dependency Mapping for All LSTs/LRTs. Before any staked or restaked derivative is listed, the proposer must publish a full dependency chain: every smart contract, every oracle, every bridge, every external service in the path from the underlying asset to Aave’s risk engine. No exceptions. I proposed this in the rETH listing discussion — rETH would pass these requirements easily, which is exactly why well-designed assets shouldn’t fear rigorous evaluation.

The Broader Governance Problem

This ARFC authorises Aave Labs to “act as counterparty on any loan, settlement, indemnity or related legal instrument on behalf of the Aave DAO.” It also contemplates “under-collateralised loans, warrants, and potential token sales” using DAO assets and future protocol revenue as collateral. The scope of that authorization is extraordinary and appropriate given the scale of the crisis.

But consider what it means in practice: the DAO is pledging future revenue to service debt incurred because of a collateral listing decision that lacked adequate risk assessment. Every AAVE holder is absorbing the cost of a risk management gap. The least they should receive in return is a binding commitment that the gap will be closed.

The 2022 CRV incident cost $1.9M. The DAO covered it and moved on. No systemic reform followed. The rsETH incident now costs the DAO 25,000 ETH ($57.5M at current prices) plus exposure to credit facilities and future revenue pledges. If the pattern holds — cover the loss, skip the reform — the next incident will be larger, because the attack surface will not have shrunk.

Recommendation

Support the recovery. Condition it on reform.

Specifically:

1. Approve the 25,000 ETH treasury commitment as part of the DeFi United recovery effort.

2. Require, as a binding precondition to fund disbursement, that Aave governance adopts a structured asset safety tiering framework with the properties described above — independent factor scoring, tier-gated LTV limits, automated tier degradation, and mandatory infrastructure dependency mapping for derivative collateral.

3. Require a post-mortem governance process that evaluates every currently listed LST/LRT against the new framework and adjusts parameters where the tier assignment differs from current LTVs.

4. Establish a standing collateral review cadence (quarterly minimum) where Risk Stewards reassess all derivative collateral against the framework, with automatic parameter adjustments for tier changes.

The DeFi United coalition has shown the industry what collective responsibility looks like. Now governance needs to show what institutional learning looks like. Pay the bill and fix the kitchen.

-– Robby Greenfield | tokedex.org

[litostarr]

Lazarus waiting for the Aave hole to be effectively filled by DeFi United before unleashing their next hack. (https://x.com/Jrag0x/status/2047754291574612283)

This is a valid fear that I’m terrified of.

[willray]

I support your idea, but the current issue is the time constraint; there may not be enough time to adjust the framework before the recovery. I suggest that framework adjustments be carried out concurrently with the recovery, rather than tied to it.

[robtg4]

I think that’s reasonable — as long as the snapshot proposal includes a stated commitment to what that concurrent framework development process looks like, with clear milestones and a pre-approved research budget to demonstrate genuine commitment.

If we can deploy millions of dollars to make community members whole in a scenario that — let’s be honest — was partially a collateral listing and LTV assignment issue, then we should also be willing to deploy capital to ensure this type of problem never happens again.

I’d also suggest including a checkpoint mechanism: if framework deliverables aren’t met within a defined timeframe, the research budget gets clawed back or reallocated via a follow-up governance vote. That gives the concurrent approach credibility without blocking recovery, and gives the community a lever if the work stalls.

Recovery without root cause accountability is just an expensive band-aid.

Thoughts?

[willray]

A child was repeatedly told by his father not to play near the river, but he ignored him. One day, he finally fell into the river. Should his father make him admit his mistake before rescuing him, or should he rescue him first and then teach him to admit his mistake?

Like you said, if he won’t admit his mistakes and repent, he’ll falling into the river again. But the problem is, he’s dying now.

[robtg4]

The issue is - the father of DeFi, albeit maybe a tad abusive, is TradFi. We have seen this exact blow-up in TradFi (it was 2008). We shouldn’t need to fall into the river again to realize that the current collateral listing strategy is unsustainable (and has been).

Point noted - but this will happen again if we don’t change course systematically.

[AlanWestbrook]

I support the goal of making affected users whole and restoring confidence in Aave markets.

However, I believe the sequence matters. Before the affected markets fully return to normal operation, Aave should first reduce LTVs and adjust collateral risk parameters for rsETH / wrsETH and other assets with similar structural risks.

The recovery fund can help repair the immediate shortfall, but it does not by itself reduce future risk. If the DAO provides 25,000 ETH to support the recovery while the same collateral parameters remain in place, the protocol may be restoring confidence financially without fixing the risk conditions that contributed to the problem.

In my view, Aave should not simply fund the recovery and then resume normal operation under the old risk assumptions. The safer approach would be:

1. Support the recovery and protect affected users.
2. Immediately adjust LTVs, liquidation thresholds, supply caps, borrow caps, and collateral eligibility where needed.
3. Only then allow affected markets to gradually return to normal operation.
4. Establish a clearer collateral risk framework so similar assets are not allowed to operate with excessive borrowing power again.

This is not about delaying user protection. It is about making sure the DAO does not spend a large amount of treasury assets while leaving the protocol exposed to the same category of risk.

Aave needs to restore trust, but trust will not be rebuilt only through funding. It also requires visible risk reduction, better collateral standards, and a clear signal that normal operation should only resume after the protocol’s risk parameters have been corrected.

In addition, I would suggest that Aave consider creating an independent L2BEAT-style public dashboard for collateral risk.

If Aave is going to rely on numerical risk scores to determine LTV caps and collateral eligibility, those scores should be publicly visible, continuously updated, and easy to compare across assets.

The dashboard could show each collateral asset’s score, the reasoning behind that score, and the specific areas where the asset can improve, such as oracle risk, liquidity depth, wrapper depth, redemption mechanisms, bridge dependencies, governance/admin controls, market concentration, and historical incidents.

This would bring several benefits:

1. Users and delegates could clearly understand why an asset receives a certain LTV or eligibility status.
2. Collateral issuers would have a clear roadmap for improving their score.
3. Projects would be incentivized to improve the quality of their collateral in order to qualify for better parameters over time.
4. Aave governance would become more transparent, comparable, and less reactive.

However, I believe this should be implemented as an independent public dashboard, not as new functionality added directly into Aave V3.

The dashboard should provide transparent scoring, analysis, and recommended parameter ranges, while actual parameter changes should still be executed manually through Aave governance. For example, governance could use the dashboard as a reference when deciding whether to adjust LTVs, liquidation thresholds, supply caps, borrow caps, or collateral eligibility.

At this stage, I do not think Aave V3 should be modified with additional on-chain functionality for this purpose. The framework should inform governance decisions, not automatically enforce them.

This approach would preserve governance oversight, avoid unnecessary smart contract complexity, and reduce the risk of turning a risk-management framework into another source of protocol risk.

In my view, Aave needs a collateral framework that is transparent, comparable, and continuously updated. An independent collateral risk dashboard could help turn risk management into an ongoing market discipline rather than a one-time governance discussion after each incident.

Rescue first is understandable, but resuming normal operation before reducing risk would be the wrong lesson from this incident.

[robtg4]

100% agree with this

[MconnectDAO]

I’ve been following this thread closely, and I want to share a perspective that’s been nagging at me since I first read the proposal.

The speed of coordination behind DeFi United is genuinely impressive seeing EtherFi, Lido, Mantle, Ethena, and others move in days rather than months shows that this ecosystem can act like a community when it matters. That part gives me hope.

But here’s where I pause:

Aave DAO contributing 25,000 ETH to cover losses from a Kelp DAO / LayerZero bridge failure this is essentially asking Aave’s depositors and tokenholders to absorb risk they never consciously accepted. rsETH was listed as collateral on Aave, yes but the exploit didn’t happen on Aave. It happened upstream, in a bridge adapter. There’s a meaningful difference there, and I think we should say it clearly before voting.

My concern isn’t about whether we should help I think the “No Ghost Left Behind” ethos is worth defending, especially after how CRV/bad debt situations were handled. My concern is about conditionality.

If this funding goes out without requiring:

A clear post-mortem and accountability from Kelp DAO

Bridge risk framework reforms across Aave-listed collateral

A structured repayment or recovery plan if frozen funds are released

…then we’re setting a precedent that DeFi’s losses will always be socialized, but DeFi’s profits will always be privatized. That’s not sustainable governance.

I’d support this proposal if it moves forward with binding conditions attached not as a punishment, but as a signal that Aave DAO takes its role seriously as a responsible financial actor, not just a rescue fund.

Curious what others think especially on whether governance reform can be made a precondition rather than an afterthought.

[robtg4]

Seems like you, me, and @AlanWestbrook are on the same page here - def agree. Cannot just give 25k ETH without lessons learned or implemented.

[anykayebyka]

Would giving any money to KelpDAO not open the doors for HARMONY users to sue AAVE?
These are the same type of incidents. I am surprised that no-one even wants to remember HARMONY BRIDGE HACK and current state of users

[puskas]

When an infrastructure protocol fails, it results in a hack, but it is the DeFi platforms that ultimately bear the cost. Carrying TVL on top of these protocols is inherently risky. Moving forward, DeFi platforms must increase their costs; they should demand a listing fee or collateral from protocol owners for every token listed. A potential solution would be the creation of an umbrella-style insurance fund. Under this model, any protocol seeking to have its assets listed on Aave must allocate a specific percentage of rewards or collateral to this fund to cover potential infrastructure-related losses. The hack didn’t occur on Aave’s end, but the DAO is ultimately paying the price for the external infrastructure failure.

[Emil]

AAVE Labs was always going to “use” their votes and make the AAVE DAO pay an enormous amount, and now we finally have that astronomical number: 25.000 ETH

Everything from here is just politics - The decision has already been made, and the only reason “DeFi United” came together, was because Aave Labs promised that the AAVE DAO would bear the brunt of the cost, even though AAVE itself wasn’t hacked.

This is as bearish as it gets for AAVE and especially the AAVE token seeing that any future black swans will automatically be paid by the AAVE treasury..

[robtg4]

I sadly agree. If this progresses toward a snapshot with this level of consensus (against, or approve with conditions) then I do think that Aave DAO wouldn’t be considered decentralized in the slightest as its processes wouldn’t have been adhered to.

@TokenLogic would love to get your thoughts on the feedback submitted thus far.

[ST0X]

First Of All, we respects the huge commitment from Stani and the rest of individuals who has contributed to the efforts monetarily. These are real money which is no small sum to even private banking clients.

Making user whole is one of the best practice when user confidence are in danger. Although key actors who cause the issue -ACI’s Marc Zeller and Chaos lab are exiting now, The AAVE business shall and will continue responsibly.

The whole AAVE V3 has a long due risk overhaul. Currently, the huge amount of PT USDe tokens still carries substantial risk on a protocol level, together with other assets such as XAUT. If no other near term solutions are in sight for AAVE, it’s to the benefits of all stakeholders that we lower all the Caps/LTV for the toxic/subpar assets brought in by ACI and Chaos lab for now. These assets, while do bringing LTV and revenue, is not worth the risk.( Bad risk reward) When review and discussion finishes, the communities, and AAVE lab will have a better roadmap as what to do with AAVE V3.

Lastly, healthy competitions from protocols are mutual beneficiary. Morph/Euler’s isolated market are very common in traditional banking. We believe the normal LPs/AAVE token holder do not have any interest in the drama that Marc Zeller of ACI has brought AAVE in with other protocols previously. Healthy competitions can actually improve the quality and standard of each protocols.

Let’s face the reality, AAVE V3 is compromised economically, but it’s not the end of day yet.
I believe all stake

[orlee]

this has happened before , example back when harmony bridge was hacked and aave had to disable all funds from the harmony pool in order to mitigate the issue , iv still not received any funds back from that , its been years.

[DTBAEE]

Responsibility, rights, and obligations should be commensurate. No partner or service provider is willing to bear full responsibility for bad debts, so security should not be entrusted to them; it should be handled centrally by AAVE.

This time, $200 million was stolen. What if $2 billion were stolen next time? Could AAVE survive?

Therefore, security must be fully handled by AAVE Labs, and the DAO will certainly be willing to allocate appropriate funds.

Whether in traditional finance or DeFi, security is a must, because no one, including yourself, can accept losing their money.