Aave Pitches Two Solutions to Resolve Kelp DAO Hack Dilemma
By Brayden Lindrea
Published on April 21, 2026.
Decentralized lending platform Aave's risk management provider, LlamaRisk, has outlined two scenarios for how bad debt from the Kelp DAO exploit could impact the ecosystem, which began when hackers stole 116,500 tokens worth $293 million from the LayerZero-powered bridge. The first scenario would see losses spread across allrsETH token holders on both mainnet and Ethereum layer 2s, resulting in roughly $123.7 million of bad debt on Aave while risking a 15% depeg in rsETH relative to Ether (ETH). The second scenario would shift the entire shortfall to other networks, but the bad debt would be significantly higher at $230.1 million. The incident highlights the risk of contagion in De
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Aave Pitches Two Solutions to Resolve Kelp DAO Hack Dilemma
Aave offers two potential solutions to address bad debt caused by the Kelp DAO exploit, which could shift losses to Ethereum layer 2 networks amid safety concerns.