BlockBeats News, April 20th, DefiLlama founder 0xngmi speculated on three possible courses of action that KelpDAO may take following the rsETH hack incident, all three of which have significant drawbacks. The final decision will test KelpDAO's reputation and Aave's risk tolerance.

Path One: Socialize Loss Among All Users

KelpDAO proposes a uniform 18.5% loss for all rsETH holders. Currently, there are approximately 666,000 rsETH tokens collateralized on Aave, mostly highly leveraged on both the mainnet and Layer 2 (assuming a 95% liquidation LTV). Upon socializing the loss, all positions on the mainnet would be completely wiped out, resulting in approximately $216 million in bad debt. The Umbrella Protocol can cover $55 million of the bad debt, with the Aave Treasury bearing an additional $85 million, leaving a remaining gap of about $76 million. KelpDAO may attempt to cover this gap by borrowing or selling Aave tokens (currently valued at around $51 million), but this would still significantly pressure Aave, with all users required to share the loss.

Path Two: Rug Pull L2 rsETH Holders Directly

KelpDAO would only back rsETH on the mainnet, considering rsETH on Layer 2 as worthless. Aave on Layer 2 currently has approximately $359 million in rsETH collateral (calculated at the current oracle price), which, if fully leveraged, would result in about $341 million in bad debt, entirely uncovered by the Umbrella Protocol. Aave can only attempt to salvage some of the market using the Treasury or borrowing, most likely abandoning Layer 2 networks such as Arbitrum, Mantle, and Base with the largest losses, leading to a collapse of these L2 markets. This approach would have a minor impact on Aave's mainnet but severely damage the L2 ecosystem's reputation and could trigger a chain reaction.

Path Three: Attempt to Return Funds to Pre-Hack Snapshot Holders Only, Extremely Difficult to Execute

KelpDAO seeks to fully reimburse only the rsETH holders from before the hack through a snapshot, with subsequent buyers or transfers bearing the loss. However, due to significant fund movement post-hack and the fundamentally pooled nature of DeFi protocols, making a clear distinction between different batches of depositors is highly challenging. The hacker borrowed $124 million on Aave's mainnet and $18 million on Arbitrum, with approximately $91 million in losses after deducting Umbrella Protocol coverage. While this approach theoretically minimizes diffusion impact, it is nearly impossible to execute in practice, easily leading to legal and community disputes.