$AAVE is gearing up for a massive DeFi overhaul after the KelpDAO crisis
Following the major incident with KelpDAO and the rsETH token, the team at $AAVE announced plans for a complete reform of collateral systems and new asset listing standards. This comes after the LayerZero bridge hack on April 18, where hackers minted uncollateralized rsETH and used them as collateral to drain liquidity from DeFi protocols.
According to analysts, over $8.6 billion in TVL was pulled from $AAVE within days, and the liquidity deficit exceeded $190 million. A portion of the WETH, USDC, and USDT pools was effectively drained, causing a wave of panic among DeFi users and raising concerns about the safety of complex wrapped assets.
Now, Aave plans to implement a multi-tier risk assessment system for assets. The most risky bridge and wrapped tokens may lose their collateral status or face significant reductions in LTV. There is also a discussion about banning the use of assets with multi-layer wrapping structures as collateral.
Meanwhile, a coalition called DeFi United is forming, involving EtherFi, Lido, and Mantle, to stabilize rsETH and restore trust in the ecosystem.
Following the major incident with KelpDAO and the rsETH token, the team at $AAVE announced plans for a complete reform of collateral systems and new asset listing standards. This comes after the LayerZero bridge hack on April 18, where hackers minted uncollateralized rsETH and used them as collateral to drain liquidity from DeFi protocols.
According to analysts, over $8.6 billion in TVL was pulled from $AAVE within days, and the liquidity deficit exceeded $190 million. A portion of the WETH, USDC, and USDT pools was effectively drained, causing a wave of panic among DeFi users and raising concerns about the safety of complex wrapped assets.
Now, Aave plans to implement a multi-tier risk assessment system for assets. The most risky bridge and wrapped tokens may lose their collateral status or face significant reductions in LTV. There is also a discussion about banning the use of assets with multi-layer wrapping structures as collateral.
Meanwhile, a coalition called DeFi United is forming, involving EtherFi, Lido, and Mantle, to stabilize rsETH and restore trust in the ecosystem.