Am I the only person who thinks it is morally questionable for Marc Zeller, who was, as I understand, co-responsible for V3 and until yesterday even ran a related incentive program with ACI, to be the first to recommend a bankrun publicly? Luckily, I do not believe the damage for Aave will be that great, but I think it is good that Aave Labs take more control given such actions. Warm regards, Saemi
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This is why segregating risk along different spokes with smaller limits with V4 is a far superior model than the pool model of V3. It is essentially a middle ground between a Morpho isolated market and the all in one everything is shared with each other mixed market of AAVE/Spark.
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Marc has been plainly acting in opposition to AAVE’s best interests ever since he lost the war over the DAO to Labs. I have my thoughts about the centralizing impact of Labs on the DAO, but regardless this behavior isn’t really anything new since it has been going on for months now.
It really is a blessing that TokenLogic will be transitioning sGHO to a more stable and standardized ERC4626 contract rather than letting ACI control the distribution of rewards, at this point I’m not convinced they are good faith actors.
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seems morph’s reserve also run out of liquidity https://app.morpho.org/ethereum/market/0xba761af4134efb0855adfba638945f454f0a704af11fc93439e20c7c5ebab942/rseth-weth
They might be lucky because their rsETH liquidity is too low to be exploited by hacker.
back to that time, if user don’t withdraw, attacker might drain again.
It do give lessons to future V4 risk configuration. AAVE will rise again for sure.
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(post deleted by author)
Urgent Appeal: Ask Vitalik to Lead and Launch Immediate Rescue for Aave with Tether, Circle, Binance, OKX and Ripple
Aave is facing a liquidity crisis triggered by the rsETH cross-chain bridge attack, which has entered a critical window for potential contagion. Without substantial rescue funding within 24–48 hours, panic will spread further. The consequences will extend far beyond the current bad debt and could even trigger systemic risk across the entire DeFi ecosystem.
We hereby issue an urgent rescue request to the five institutions: Tether, Circle, Binance, OKX, and Ripple. We sincerely ask Vitalik to lead the coordination and swiftly launch a joint rescue mechanism:
1. The five institutions jointly provide capital to inject short-term liquidity into Aave, prioritizing covering the bad debt gap, stopping the bank run, and stabilizing market confidence.
2. Finalize a unified rescue plan as soon as possible and implement it with maximum speed to prevent further escalation of the crisis.
3. Safeguard the foundation of Ethereum DeFi and prevent risk contagion to stablecoins and the entire crypto market liquidity system.
Time is extremely critical. Every hour of delay increases the risk of contagion. We urge all parties to act in the overall interest of the industry, take immediate action, make quick decisions, and jointly stabilize the market.
This is a first going through something like this. My lending network is ETH on Base, are we able to withdraw if we’d like to?
The WETH interest rate model has been adjusted via the Risk Steward across Arbitrum, Base, Mantle, and Linea, reducing slope2 to 1.50% and bringing the borrow rate at 100% utilization down from 8.5–10.5% to 3.0% APR. This change ensures borrow rates remain sustainable under current market conditions, keeping leveraged positions viable and preserving reserve stability across affected markets.
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That would make available liquidity even more difficult to get.
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Have we lost all the funds we deposited in an Aave protocol?
Hi everyone,
I’m new here and I’ve been following the work of LlamaRisk and the other teams with great respect. I can see how much effort is being put into keeping the system stable. Thank you for that!
However, one thing keeps bothering me when I read questions from users like Flyn29 (“Have we lost all our funds?”). It breaks my heart to see this level of uncertainty. My simple “street logic” tells me: when a partner is in trouble, you don’t leave them alone in a burning building and discuss interest rates (like the 3% proposal). You go in, take them by the hand, and help them manage the assets—the 533,500 ETH—together until everything is fixed.
ApuMallku already suggested that low interest rates make it harder to attract new liquidity. Wouldn’t it be a sign of real strength and care if Aave took over the management of Kelp? Not to punish anyone, but to be able to tell users like Flyn29 clearly: “We are in control now, your funds are safe with us.”
I haven’t found an answer on X, but I believe this forum is the right place to talk about active help and taking over responsibility. What are your thoughts?
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I can sell my arbitrum and base liquidity tokens on uniswap for quite a steep discount. Greater than 50% loss. Do people think it’s better to wait and hope for some kind of recovery or is a greater than 50% loss better than a 100% loss.
There won’t be any loss, good things come to those who wait.
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I’d strongly suggest that the AAVE risk assessment changes slightly to account for what is most probably an infrastructure related incident for OFTs
There should be a stronger requirement that OFTs utilize at least 2 DVNs and immediately halt markets that don’t meet that threshold. I’d even argue if you’re going to onboard an asset that’s an OFT AAVE should probably run one of the DVNs
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I’ve been with Aave since the LEND token and staked AAVE in the Safety Module for years. When Umbrella launched, I migrated to stkWETH because I believed in the upgrade. I’m now facing significant losses from a bridge exploit in a protocol I never interacted with.
I accepted slashing risk. But I staked in Umbrella because I trusted the Aave protocol — the smart contracts, the liquidation engine, the risk parameters. What I did not believe I was doing was underwriting the bridge security of KelpDAO or the DVN configuration choices of LayerZero OFTs. The failure here was not in Aave’s contracts. It was in the listing decision and the supply caps that allowed this scale of exposure.
The documentation cited $400 in deficits against $9.5B in borrows during v3.3’s first month. At 9% APY, the yield I earned doesn’t cover a fraction of what’s being slashed. That risk/reward was never calibrated for a $196M external bridge hack.
KelpDAO’s infrastructure failure created this deficit. They need to be at the front of the line for making affected parties whole — through their treasury, their token, or whatever means necessary. Aave governance should be actively pursuing that.
If stakers get wiped out in month two from an external hack, the module will not attract capital again without fundamentally different listing standards and risk parameters.