Founder of DefiLlama outlines three possible approaches to the Kelp DAO incident and the corresponding potential bad debt scale

Deep Tide TechFlow News, April 20th, according to a post by DefiLlama founder 0xngmi, after KelpDAO was hacked, Aave faces severe bad debt disposal pressure. Currently, there are three potential solutions: first, socializing the losses among all users, with users bearing an 18.5% devaluation, resulting in approximately $216 million in bad debt. Aave’s umbrella insurance can cover $55 million, and the treasury can add another $85 million, still leaving a shortfall of about $76 million; second, executing a “rug pull” on rsETH holders on L2, which would generate about $341 million in bad debt, with the heaviest losses in the Arbitrum, Mantle, and Base markets; third, returning assets to holders based on the pre-attack snapshot, but this operation is extremely difficult, and even after umbrella insurance coverage, an estimated $91 million in losses remain. Additionally, some opinions suggest confiscating the hacker’s collateral to offset part of the bad debt, while the Aave OG security module still holds about $300 million worth of AAVE tokens. A 20% reduction could provide an additional loss coverage of approximately $60 million.