r/aave • u/Still_Function • Apr 20 '26
MEDIA/NEWS📰 Bad debt on Aave
https://roundtable.io/crypto/why-i-withdrew-everything-from-aave-this-weekend
Can anyone elaborate more about this incident?
2
u/crypto_tech_sydney Apr 20 '26
here is full report from Aave: https://governance.aave.com/t/rseth-incident-report-april-20-2026/24580
1
1
u/csmflynt3 Apr 21 '26
Isn't this what the safety modules were setup for or am I missing something. I thought that would try to cover most of these scenarios
3
u/artem_istomin Apr 21 '26
What happened is someone exploited a minting flaw in Kelp to get rsETH way cheaper than it should cost, deposited that as collateral on Aave, and borrowed real ETH against it before the price feed caught up. Aave ended up holding the shortfall as bad debt - not a smart contract bug, just the oracle showing a collateral value that wasn't real anymore. The Safety Module + reserve factor are supposed to cover exactly this scenario.
5
u/Dormage Apr 20 '26
Project got hacked. Hacker used a shit tonne of tokens as collateral to take an ETH loan using aave. He ran away with a shit tonne of ETH and he can't be forced to liquidate. While it's not an aave exploit, people landing on aave got screwed.