The situation of Aave is much more serious than the figure of $295M that KelpDAO was hacked

The utilization rate has been pushed to 100% due to over $5.4B being withdrawn out of panic earlier -> causing over $5B $ETH to be stuck

The hack was on KelpDAO, but Aave is the one bearing the debt -> whales are withdrawing funds

The issue is:
- Aave is seen as the liquidity brain of DeFi and also constitutes a large part of the cash flow in the market
- When the utilization rate reaches 100%, users cannot withdraw/sell $ETH or liquidate to cover debt obligations

Simply put, a company with unsecured loans is being hit, but the main bank is suffering heavy losses. If the main bank is withdrawn en masse, it cannot respond in time, leading to a severe liquidity shock

$ETH is under extreme selling pressure due to the current situation, some investors are using the method of selling aETHwETH tokens as an escape route for the stuck $ETH. With stablecoins stuck, they choose to borrow USDT/USDC at a loss of 10-25% (LTV ~80%) to recover assets

If $ETH drops sharply by ~20% - 50% now, it could break down completely. And if the main bank breaks down, then everyone in DeFi understands what comes next

Hope Aave and the whales can work together to come up with the best solution and resolve this issue as soon as possible

#AAVE #KelpDAO $AAVE
{spot}(AAVEUSDT)