Aave: Discussing Two Bad Debt Processing Solutions, Service Providers and Ecosystem Participants are Collaborating to Address Bad Debt

BlockBeats News, April 21st, Aave released an rsETH event update, citing the LlamaRisk report proposing two default scenarios:

1. Loss socialization, with losses socialized across the entire chain, this scenario is expected to incur approximately $123.7 million in bad debt for Aave;

2. Loss limited to L2 rsETH, with this scenario expected to incur approximately $230.1 million in bad debt for Aave;

Aave also stated that Aave DAO service providers and ecosystem participants are jointly leading an effort to address any defaults. This effort has received multiple preliminary commitments from various parties. It is reported that the Aave DAO protocol treasury holds approximately $181 million.