Aave (AAVE)

Can we reopen the strait of @aave please? @LayerZero_Core @KelpDAO @StaniKulechov take your shares of the blame and come to an agreement. Let the spice flow

⚠️ $AAVE REACTIVATES THE ETH MARKET… BUT THIS CREATES A PROBLEM Aave has just reopened the ETH market on the Ethereum network → but this decision is controversial under current conditions: → it allows some people to execute very profitable strategies and especially: → it keeps the pools locked for other users some use ETH derivatives (like weETH) to: • deposit • borrow • repeat in a loop → and profit from a yield spread result: → up to ~40-45% possible yield the problem behind • these strategies consume all liquidity • the pools remain 100% utilized so: → impossible for some users to withdraw their funds → or to refinance their positions those who run these strategies: → earn a lot but others: → remain stuck in the protocol the decision gives the impression that: → we prioritize activity and numbers rather than: → risk management → user experience

While $AAVE saw a -44% TVL decline other projects like $ONDO, $CFG and $HYPE benefited from it https://t.co/MMFgjivFyx

I just published my 173rd FREE consecutive newsletter on crypto AI & robotics (link in bio) AI Agents using DeFi protocols will also be adversely impacted; but perhaps they can react more efficiently? Kelp/Aave just got hit for $293M, the largest DeFi exploit of 2026 Every agentic payment protocol (x402, MPP, ACP) assumes on-chain state is sound; this means the systemic risk is pervasive A perfectly coded agent still loses capital if the collateral is misappropriated

Feels like DeFi's dying after the KelpDAO / Aave exploit. But despite the exploits, DeFi still has a ton of great catalysts and developments shipping this quarter. Here are 7 things worth getting excited about. @AskVenice shipped end-to-end encrypted AI Instead of trusting Venice not to read your prompts, you can verify it yourself. Inference runs inside a hardware enclave, prompts are encrypted on your device and only decrypted inside the enclave, and you get an attestation receipt on every response. Neither Venice nor its GPU providers can see your data. VVV rallied 10% on the launch. xStocks went live on @Mantle_Official Tokenized equities are now tradable 24/7 on Mantle's native DEX Fluxion. Compliant under Switzerland's DLT Act, fully collateralized, Bybit as the deposit/withdrawal rail. Flowdesk also launched a market on Morpho that lets you borrow AUSD against SPYx on Mainnet. Leverage on tokenized equities, using a DeFi stablecoin, with Swiss-regulated collateral. And the borrow rate is currently -11%, which means you're getting paid to borrow. @gnosis_ is building the Ethereum Economic Zone The most serious attempt I've seen at fixing fragmentation. Synchronous composability across L2s and mainnet, no bridges, ETH as the gas and settlement asset. The Ethereum Foundation is co-funding it and Aave, Centrifuge, Flashbots, Safe, CoW Swap, and xStocks are founding members. Fragmentation has been Ethereum's biggest self-own for years. This is the first time it feels like people are actually coordinating on a fix, and there's a competent team behind it. @megaeth is closing in on its first TGE trigger Any one of three KPIs flips it: • USDM averaging $500M over 30 days • 10 MegaMafia apps fully deployed with real usage • 3 apps doing $50k+ in daily fees for 30 consecutive days 6 of the 10 apps are already live with Stomp and https://t.co/ilbzkYpms0 launching this week. Polymarket odds of a $MEGA TGE by May 31 jumped to 93% last week. Lez go some of my pre-tge bros are starving @AerodromeFi is on track for the Aero merge in July The merge unifies Aerodrome and Velodrome into a single DEX. Two new revenue drivers land with it. • The AER engine captures value that currently leaks to aggregators, solvers, and routing layers, and redirects it back to veAERO. • The REV engine captures MEV at the DEX level via embedded auctions in Slipstream V3, so instead of searchers extracting from LPs, the protocol auctions it and redistributes. • MetaSwaps beta for cross-chain routing is already live. @Morpho Midnight Morpho also dropped a new product line. Different from V2. Blue is pool-based, variable-rate, open-term. Midnight is fixed-rate, fixed-term with externalized rate and risk management. The two will run side-by-side and audits are finalizing. @DefiLlama as been cooking 1) They rolled out an investor relations portal with Spark this month offering verified on-chain metrics and investor-grade reporting. Sonic is next. 2) They also just integrated job listing data into LlamaAI. Still the single most valuable public good in DeFi. I know trust has taken a beating this year and being on X all the time will push you toward doomerism. But there's always good stuff happening if your eyes are open to it. DeFi is still cool and I'm not leaving.

In today's @Unchained_pod Daily newsletter: 🔥 Aave faces up to $230M in bad debt — and its treasury barely covers it ⚔️ Kelp says LayerZero's own systems caused the $290M disaster 🔒 Arbitrum froze $71M of the stolen funds in a rare emergency action 🌎 Read today’s must-know crypto news… and subscribe! https://t.co/lDYIHfTvFz

In today's Unchained Daily newsletter: 🔥 Aave faces up to $230M in bad debt — and its treasury barely covers it ⚔️ Kelp says LayerZero's own systems caused the $290M disaster 🔒 Arbitrum froze $71M of the stolen funds in a rare emergency action 🌎 Read today’s must-know crypto news… and subscribe! https://t.co/5ThPTIyqcr

All of @aave's core markets hit 100% utilization at once, which is the lending protocol equivalent of a full stop. Here's what that actually means: → No liquidity available for withdrawals → Liquidations can't be processed → $3B in USDT and $2B in USDC stuck with no clean exit → If prices move, bad debt compounds with no mechanism to cover it 100% utilization is the worst state a lending protocol can be in, and it's not just a liquidity problem. When liquidations cannot execute, the protocol has no way to protect itself against further bad debt. More than $6B was withdrawn from Aave in under 24 hours, with many more unable to follow due to the utilization cap. Depositors are the least at fault here, and they're carrying the most immediate risk. I never believed I would see Aave in this situation, but here we are.