LlamaRisk models $123M-$230M Aave bad debt from Kelp rsETH exploit as WETH reserves hit 100% utilization
Coindesk •
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Promote with Leviathan NewsLlamaRisk's rsETH Incident Report for Aave DAO lays out two loss paths: a uniform 15.12% haircut socialized across all rsETH producing ~$123.7M in bad debt with Ethereum Core taking the biggest absolute hit, or an L2-isolated 73.54% haircut producing ~$230.1M with Mantle facing a 71.45% WETH shortfall and Arbitrum 26.67%. WETH reserves across chains are sitting at 100% utilization with under $20 of idle liquidity, so liquidations basically can't run without amplifying cascade risk. The recommendation is to pause the WETH Umbrella module and split the bad debt between the Aave DAO treasury and ecosystem participants.
TLDR by @Benthic
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