The grand event in Hong Kong is in full swing, but how should KelpDAO end? Indeed, human joys and sorrows are not interconnected The contrast in the world is quite large. On one hand, the Web3 event in Hong Kong is in full swing, with various big shots chatting and laughing, while on the other hand, KelpDAO's $300 million was looted by hackers, and Aave users are trembling and waiting to share the losses. The joys and sorrows of humans are not interconnected, I just feel that they are noisy. How absurd is this attack? On the 19th, Kelp DAO was hacked and $293 million was lost. But the most absurd thing is not that the amount is large, but that the code is fine, the protocol has no loopholes, and the hacker just forcefully took the money away. How did it happen? Hackers forged a cross chain message, creating 116000 rsETH out of thin air like magic, and then rushed into Aave with these "fake coins" as collateral, lending out $236 million in real gold and silver WETH, and then turned around and ran away. It's like taking fake money to the bank as collateral, and the bank actually gave you a loan. Waiting for Aave to react, there is still a pile of unanchored rsETH bad debts in his hand that cannot be cleared. The vault only has $50 million, and the remaining $150 million gap can only be shared by ordinary users who want to earn some interest by depositing WETH DefiLlama founder 0xngmi deduced three ending paths, each one heart wrenching: 1 → Let's all lose together All rsETH holders will be deducted 18.5% proportionally. The most 'fair', but also the most painful. You just wanted to save a coin to earn some interest, but for no apparent reason, almost 20% was deducted. Who wouldn't collapse in exchange? 2 → Protect the main network and abandon L2 KelpDAO only guarantees rsETH on the main network, with direct zeroing on L2. Aave L2 has $359 million in rsETH collateral, which, including leverage, can generate $341 million in bad debts. Aave is likely to abandon the chains with the highest losses, Arbitrum, Mantle, and Base, causing these L2 markets to collapse directly. Simply put, the main network users have been retained, and all L2 users have been reset to zero. 3 → Return according to snapshot, which sounds beautiful but cannot be achieved at all Only compensate the holders before the attack, and accept bad luck for those who buy after the attack. But the problem is that money has been flowing back and forth in the pool for a long time, and DeFi protocols cannot distinguish who is whose money. Technically, it is almost impossible to achieve, and it is prone to legal disputes and community pressure. Hackers borrowed $124 million (mainnet) and $18 million (Arbitrarum), leaving a loss of $91 million after deducting insurance. Theoretically, the impact is minimal, but in reality, it cannot be achieved at all. The chain effect has just begun How significant is the impact of the event? Now it's just the tip of the iceberg. Today, after the KelpDAO rsETH hacking incident, the chain effect of the entire DeFi ecosystem began to emerge, and the stablecoin lending rates and utilization rates of multiple lending protocols in the Solana ecosystem increased. The panic in the market is spreading, liquidity is starting to tighten, and more dominoes may be ahead. This is not a project issue, it is a systemic risk for the entire DeFi ecosystem. Cryptocurrency has always been a high-risk area for hackers, but retail investors cannot always bear the losses, right? Security risks have always existed, which is the norm in the encrypted world. But the problem is that when the project party and the agreement earn transaction fees, they are thriving, and if something goes wrong, the user becomes the "last line of defense", which is illogical. You just wanted to save a coin to earn some interest, but unfortunately it was deducted 18.5% or reset to zero. You said this is DeFi's risk, I agree. But you cannot enjoy the dividends of DeFi while letting users bear all the risks. The discussion at the Hong Kong event was about the future of Web3, but KelpDAO users are facing the current losses. The joys and sorrows of humanity are not interconnected, but I hope that next time, retail investors will not be the ones to foot the bill. Always present, but also always on guard. ⚠️ @KelpDAO @aave @0xngmi