KELP rsETH BACKING SCENARIOS FROM LLAMARISK 1. Full socialization • Mainnet and L2s are treated equally • Backing loss: 15.12% • Aave's bad debt: $123,708,727 • Umbrella covers $54,060,000 only of mainnet losses (60%) 2. Losses isolated to L2s • Mainnet retains full value, L2s take the loss • Backing loss: 26.46% • Aave's bad debt: $230,113,582 (only L2s) 3. Aave coverage plans: • DAO holds $181m ($62m in eth-correlated, $54m in Aave, $52m in stablecoins) • 80% of ETH in umbrella has requested a withdrawal • Llamarisk suggested pausing the module. Withdrawals cannot be finalized while paused • If losses are passed onto L2, umbrella would not be used • A point to consider is that when there's a liquidation and utilization is 100%, the fallback is to receive aWETH instead, which keeps the liquidator’s capital in the reserve until utilization drops. This is dependant on what Kelp decides and negotiates with L0 Source: governance[.]aave[.]com/t/rseth-incident-report-april-20-2026/24580 @LlamaRisk(olimpio)