💸 AAVE Incident Update – Will losses be finalized on L2? Aave states: “Mainnet ETH is fully backed.” Though brief, this statement carries significant implications: ✔️ Interpretation: Mainnet losses will be resolved with full principal protection, while all losses will be absorbed by L2 rsETH holders (potentially $0 value). ✔️ Behind the scenes: Mainnet Aave has insurance funds via Umbrella Insurance → If losses occur on mainnet, they directly impact Aave DAO and Labs. But if losses are shifted entirely to L2, they become user losses instead. Current rsETH holdings on L2s: Base: $71M Arbitrum: $152M Mantle: $30M Ink: $21M Linea: $1.4M = By reallocating all losses to L2 rsETH holders without touching Aave DAO’s treasury, the issue is resolved. As noted by Spark’s Head of Strategy: Good news for mainnet Aave users. A devastating blow for L2 Aave users. Yet, the fact that Aave deliberately designed this structure to eliminate DAO losses and shift all risk to holders… well, it raises questions. #Aave #에이브