Altcoins News
By James Thorp
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What the Liquidation Means for Aave. The bad debt from Kelp DAO hit Aave hard. Lending protocols live or die by their collateral…
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Ethereum and Arbitrum Both Targeted. The hacker spread positions across networks. That's pretty common for people trying to complicate…
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What's Left to Recover. Ten percent doesn't sound like much, but in DeFi terms it can still be millions of dollars.
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Aave just liquidated the Kelp DAO hacker's rsETH positions. Both Ethereum and Arbitrum networks saw the action, which brings the lending protocol within striking distance of…
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The liquidation happened fast. Thaddeus Pinakiewicz from Galaxy Digital said Aave's now only 10% away from full recovery.
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The bad debt from Kelp DAO hit Aave hard. Lending protocols live or die by their collateral ratios, and when a hacker exploits a connected protocol like Kelp DAO, the fallout…
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Liquidating the hacker's rsETH is a big piece of that puzzle. rsETH is Kelp DAO's liquid restaking token, and it was at the center of the exploit.
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Galaxy Digital's been tracking the recovery closely. Pinakiewicz didn't give exact numbers on how much bad debt remains, but 10% away from full recovery suggests Aave's made…
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Aave had to coordinate liquidations on two separate networks with different gas costs and liquidity conditions. Ethereum liquidations are expensive but liquid.
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No word yet on exactly how much rsETH got liquidated or what the final recovery value was. Liquidations don't always return full value, especially when the underlying asset is…
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Kelp DAO itself hasn't said much about the hack's full scope. The protocol offers liquid restaking, which means users deposit ETH or staked ETH derivatives and get rsETH in return.
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See also: Bitmine Stakes $451M More ETH, Now Controls 3.7% of Total Supply
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Ten percent doesn't sound like much, but in DeFi terms it can still be millions of dollars. Aave's a massive protocol with billions in total value locked, so even a small…
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Aave's probably working through other recovery mechanisms too. Some protocols use insurance funds or reserve pools to cover bad debt.
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The timing of these liquidations matters. Crypto markets have been volatile, and liquidating during a price spike can recover more value than liquidating during a dump.
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