What you say seems confirmed by the fact that rsETH price currently shows a haircut of roughly 18% to where it traded a week ago (source: Coingecko).
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So, am I correct in understanding that an ETH for a certain amount was issued without an official announcement? And those who took advantage were able to withdraw. What should the rest of us do? And how often will it be issued? Why exactly is the distribution structured this way? Should we simply wait for the distribution to reach equilibrium, or should we catch the sudden drop in AAVE?
No, that’s not how it works, and your number makes no sense. You have to look at the Loan-to-Value of all debt backed by all rsETH in AAVE (which is hard because LTV is by account), rather than the attacker’s LTV on his rsETH if you consider the attacker’s fake token is fungible and the loss is already socialized. Your current calculation gives the attackers fake token the value due to socialization, but not accounting the socialized loss among all other holders of rsETH in AAVE…
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I was able to get out of my arbitrum position using your suggestion at a 5.5% discount. With Arbitrum being more distressed than Base, I feel like that was a pretty good deal under the circumstances. I’m sure there will be a resolution at some point. But I imagine a 5 to 10% haircut on Arbitrum is quite likely anyway. Still stuck in Linea, but there’s no liquidity to swap there,so waiting on a resolution for that one. Anyway, I’m mostly out. And I very much appreciate your post.
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Kelp could argue they did not allow redemption of the unbacked rsETH and burn what was minted.
From a technical perspective, they certainly have the power to make the lending protocols absorb the entirety of the losses.
Whether that opens them to more legal liability than socializing their other rsETH holders is unclear, but the pattern of users of lending protocols being treated as unsecured (and unsophisticated/less likely to persue legal remedies individually) creditors is clear in other large exploits and fraud.
We should consider this possibility and prepare a response if Kelp goes this route.
I’m still stuck on Arb — how did you exit exactly, was it CoW aWETH → WETH? And was it around ~5.5% discount like you said? Also what did you move into after? I’ve got an order sitting at ~4.5% discount but CoW is showing like ~11% min out which doesn’t really make sense to me
try oku.trade, you can trade aWETH at a 1-2% discount with a market order. Fast execution. I like CoW and use it mostly, but when this kind of stuff happens, oku trade searches all of the liquidity pools.
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I first set a limit order at an 8.5% discount which partially filled. Then I canceled and set another limit order for the rest at 9.5% discount. Then I calculated the difference in the amount of aETH tokens I had and the amount of WETH I actually received and it worked out to 5.5% difference. So it appears as though cow swap was able to fill at a better price than I had set. For now I’m just holding the WETH. If I do anything, I’ll probably bridge it to mainnet and stake it in Lido for stETH and some in ether.fi for weETH. I’ve been playing around in Defi for several years now. I’ve had small amounts involved in other exploits but I had a decent amount in Aave on account of its battle tested history and reputation. I had low leverage long on Aave too, so I had to pay back usdc as well to get out. So I’m taking a break from Defi for a while. The panic has even spread now to Solana with lending markets there at near 100% utilization. So I’m sitting on the sidelines where I can.
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Hello. I supplied native ETH to the Aave V3 Linea market and received aLinWETH in return. This was a pure, simple lending position - no borrowing, no collateral usage, no looping strategies, no restaking, and no involvement with rsETH. Just basic supply of ETH. Like many other users on L2 chains, my position is currently frozen due to the rsETH incident.Key principles I believe should guide the resolution: Pure ETH suppliers who did not participate in leveraged strategies or rsETH should not be forced to bear losses from a bridge exploit on another protocol.
Bad debt and haircuts should be allocated fairly, prioritizing protection of innocent lenders.
Chains with the smallest exposure to the incident should be considered for earlier unfreezing where possible.
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Those who previously argued that E-Mode was generating substantial TVL and revenue for Aave seem to have little to say now. Any incremental revenue it may have produced is negligible when set against the scale of the bad debt that has emerged. Likewise, some of the risk providers who were once vocal about being undercompensated are now silent. This naturally raises a broader question: where is the accountability?
Going forward, risk considerations must take priority. If existing risk providers are unable to deliver an adequate standard of judgment and oversight, then the DAO should seriously reconsider the structure of this function, including whether a greater role should be given to firms with stronger technical review capabilities, such as code auditors. Most importantly, I hope Aave can accelerate its transition to V4, where a more robust and resilient risk framework may be possible.
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Read the April 6 post “Chaos Labs Is Leaving Aave”
Money solves many problems, but not all of them. The deeper issue is a fundamental misalignment on how risk should be managed at Aave. The more we discussed the path forward, the clearer that gap became.
It came down to three things:
Core Aave contributors left, materially increasing the workload and operational risk.
For L2 suppliers with no debt still stuck on Arbitrum,Base. You can still exit via CowSwap Limit orders by selling your aWETH token bills at near fair value. I keep monitoring the exchange rates and for orders between 1-20 aWETH to WETH/ETH you have a maximum slippage of 1-5%, but remember only with LIMIT ORDERS. NO INSTANT SWAPS. For those with bigger aWETH bags, split it between multiple batches. Check the parent comment I replied to. User @moonbeam was able to exit via this path also.
Stop arguing between each other what Aave should do and try to save your bag. Good luck!
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I told you already to click on the parent comment of my reply. It’s already explained, I can’t spam the same explanation to each one of you. You will find there the entire explanation and if you follow closely you will see what @moonbeam said and how it worked for him also.
Cowswap has security issue. Please google the event and take care before any action.
I’m telling you me and another person exited through this and you tell me about the security issue they had on 14 april and they put a banner on they website for 7 days that CowSwap contracts are safe and the incident was solved? You are behind with the news. Get your ETH out of there son. Good luck.
Do I need to repay aave debt first?
Yes if you have debt you have to repay it, otherwise when you swap your aWETH token bills to WETH the Aave bots will liquidate your aave position first before you get the chance to swap the bills. This works only for pure suppliers without debt, which got freezed in the pool.
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The CoW Swap security issue has been resolved. Always revoke any approvals after your trade is filled to be safe. I sent my recovered ETH to mainnet and swapped for stETH and weETH on Curve and regain some of my losses in ETH terms as stETH an weETH were trading at a small but worthwhile discount to ETH. I don’t know if that discount still remains though.
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