100% rebacking of rseth with no haircut
0 bad debt on any aave instances on any chain
No liquidations apart from North Korea
Kumbaya defi energy restored
They’re calling it kulechov mode
Aave is my life's work and we're working nonstop to find the best possible outcome for users.
I’m personally contributing 5000 ETH to DeFi United as we continue working together with partners on formalizing more commitments. I’m working to see this resolved and market conditions normalized as soon as possible.
DeFi United.
This point of view is beneficial for AAVE’s survival, but it’s not really fair.
All the stolen (aka fraudulent) stETH are on the ethereum network.
stETH on every other chain are legit and never was stolen. It must be redeemed 1-to-1 with ETH from Kelp.
If AAVE want to treat stolen stETH as real stETH it means that ETH reserves at Kelp is not enough and redeem price drops to 0.85.
But this is illegal to fully redeem stETH on ethereum but not on other chain. Kelp ToS never stated that stETH redeem price depend on chain.
I’m sure there is not point in blaming anyone.
This is complex situation and every protocol and user bear the responsibility in some extent.
But I’m sure it’s not fair to put all the loss on one group of people because it’s profitable for another group.
I’m ready to lose some of my Eth deposit on Ink chain.
But I’m sure L1 users also was accepting some risks when depositing Eth on the ethereum chain to AAVE.
@Layss65@KelpDAO I believe it’s because when hacker unlocked more rsEth on L1, he deluted rsEth supply and dropped the echange rate of rsEth to ETH on any chain.
rsEth on every chain should have the same rate by Kelp design.
@Theonlygoat11@KelpDAO I’m in the same situation as a person who provided ETH to AAVE on ethereum and now can’t withdraw it.
As you stated, they accepted the risk of providing liquidity for extra yield
@Theonlygoat11@KelpDAO Once again, people not chosen to use rsEth on other chains.
I’m personally haven’t touched L0 or rsEth.
I deposited to AAVE backed Tydro on Ink chain.
There is no reason for me to pay for everyone, imo
@_dodger__blue_@KelpDAO wrsEth and rsEth both backed by Eth in staking and have the same rights for this Eth reserves, until it’s not stated otherwise in the ToS of Kelp.
So trying to unlock Eth with a stolen rsEth is illegal
@_dodger__blue_@KelpDAO Why you say “your”? That’s not my risk, I just deposited to Tydro. Never touched rsETH at all.
Money was stolen from everybody and there is no real reason for me to pay for everyone, imo
The hacker increased the free circulation of rsETH by releasing funds that were required to remain locked in the LayerZero bridge, effectively doubling that portion of the supply.
At this point, Kelp's ETH reserves became insufficient to redeem all outstanding rsETH at 1:1.
Using these funds, the hacker stole money from Aave WETH suppliers on the Ethereum network.
At the same time, holders of depreciating rsETH tokens across all networks began trying to use them to extract more valuable tokens from others, especially across Aave forks.
At this point, the losses fell not only on rsETH holders or L2 users, but on everyone who was providing liquidity at the time.
Both the attacker and previous rsETH holders took value from many people across many networks.
That's why we shouldn't assume this is only a problem for current rsETH holders, only for L2 holders, or only for Aave WETH suppliers.
Is rsETH fully backed on Ethereum?
All Kelp reserves back all rsETH tokens. rsETH on any given network is backed only by ETH on ethereum.
The increased free circulation of rsETH disrupts the proper functioning of rsETH. For Kelp to function properly, rsETH tokens must be backed 1:1 by ETH reserves.
@KelpDAO has a choice:
1. Align rsETH supply with ETH reserves by reissuing rsETH tokens based on a snapshot taken at the block immediately before the excess rsETH was released from the LayerZero contract.
2. Socialize the loss pro-rata, so that every rsETH across every network is backed at the same reduced ratio.
There is no reasonable justification for Kelp to favor one network over another. The stolen tokens themselves sit on the Ethereum network. Illegally obtained and spent by the attacker.
But now this tokens already changed the owners and should be treated as any other rsETH. On any other chain.
Therefore, @aave's assertion that rsETH on Ethereum is fully backed is incorrect.
ETH on the Ethereum network backs all rsETH on all networks.