Arbitrum ETH pool should be unfrozen immediately. $18M bad debt against $335M in locked supplier funds is indefensible.
Aave has officially confirmed that rsETH on Ethereum mainnet is fully backed. This changes everything. The bulk of what initially looked like $290M in bad debt is not bad debt at all. Mainnet positions are liquidatable through normal mechanisms. What remains is a contained L2 problem.
According to CoinGecko’s analysis, the attacker borrowed approximately $18M on Arbitrum. The total Arbitrum ETH pool holds $335.68M in supplier funds. That means the bad debt represents roughly 5.4% of the pool and Aave’s treasury alone sits at $83M, nearly 5x the entire Arbitrum bad debt.
Every day the Arbitrum pool remains frozen, legitimate borrowers paying 11% APY are incentivized to repay, meaning liquidity is naturally recovering anyway. The freeze is actively hurting suppliers while providing zero additional protection against a bad debt that is already capped, quantified, and affordable.
After this many hours Aave should:
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Publish full chain by chain bad debt breakdown publicly today
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Confirm mainnet positions are being liquidated normally given rsETH is fully backed
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Cover the $18M Arbitrum bad debt from the DAO treasury immediately
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Unfreeze the Arbitrum ETH pool as a separate and independent action from mainnet
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Provide a concrete timeline for full resolution across all affected chains
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Commit to isolated risk pools for exotic collateral in V4 so this never happens to plain ETH suppliers again
Covering $18M to make Arbitrum suppliers whole is not a question of affordability. It is a question of whether governance moves fast enough to deserve that trust or they will treat it like Harmony and fuck all of us with silence.
Every hour of unnecessary delay is reputational damage.