Andre Cronje: Aave has no subsidy-user loss mechanism and has withdrawn ETH to the fund management wrapper contract
Odaily reported that Sonic Labs co-founder and Flying Tulip founder Andre Cronje posted on X stating that his team is continuing to investigate the L0/rsETH incident. The preliminary report indicates that approximately 200 million USD rsETH was stolen, possibly due to private key leakage or misconfiguration. The stolen assets were then deposited into a certain exchange as collateral to borrow ETH (due to insufficient rsETH liquidity).
Andre Cronje noted that the affected positions are technically still collateralized, but in the event of bad debt, the exchange’s token mechanism and security module would serve as the first line of defense to absorb the risk. However, the exchange does not have a mechanism to subsidize user losses; otherwise, this could trigger a bank run. Currently, the exchange holds about 7 billion USD worth of ETH and roughly 100 million USD in withdrawal capacity, so the overall impact of this incident is limited. Additionally, to prioritize user liquidity, Flying Tulip has withdrawn all ETH from the exchange to its fund management wrapper contracts. This decision was made because the exchange’s available liquidity dropped below its minimum threshold.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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