Catching up. Took a couple hours reading all the discourse. The @aave / @KelpDAO / @LayerZero_Core situation is really bad. My stream of thoughts and learnings. Particularly curious thoughts on my last point on whether Aave V4 would've limited contagion at all: > Follow-on effect of assets being withdrawn from Aave: Utilization shoots to 100% across stables and $WETH, lenders can no longer exit a protocol with bad debt, liquid staked ETH loopers face liquidation risk on $aEthWETH. Everything is stuck due to the bank run until the impending (messy) resolution. > LayerZero's DVN thresholds will go up due to this. Not many were 1/1 (rsETH was), but over 80% were 2/2. Many OFTs have been frozen until the situation resolves, in an abundance of caution. > Several operators like @withAUSD and @ethena have controls in place to prevent malicious behavior at the OFT level. Limits events like this. > $ETH is hurt by all these DeFi hacks. Its recent strength should falter here. I continue to not hold much since finally capitulating in 2025. > This is another point for the @Morpho model. I'm trying to reason through hypothetical follow-on effects if this happened to a significant rsETH Spoke on Aave V4 vs. a significant rsETH market on Morpho. The Aave V4 Spoke with bad rsETH debt would still have a similar impact on its exposed Hub as on V3 (with the impact depending on the rsETH Spoke's risk parameters, but you could've had max borrow on V3 too...). Stablecoin utilization would go to 100% on V4 too, right? Versus Morpho, follow-on effects and contagion risk are limited due to the isolation of exposure. Even if this was a $100M+ market with exposure across many prominent vaults/curators, I imagine utilization on other markets wouldn't reach nearly as much of a peak as on Aave, right? Very curious other people's takes on this. Haven't seen much discourse on how this situation might (or might not) be different had it been on Aave V4.