POPA ReconSince it was known that AAVE had bad debt, normal people who had money on AAVE in ETH/stablecoins rushed to withdraw, which pushed…
Since it was known that AAVE had bad debt, normal people who had money on AAVE in ETH/stablecoins rushed to withdraw, which pushed utilization on the WETH pool up to 100%. At 100% utilization, there is no spare liquidity left in the pool, so even if your deposit is “there” on paper, there’s nothing available for you to pull out until borrowers repay or new deposits come in. On top of that, Aave froze rsETH markets and some related markets as a defensive measure, which limited movements and added to the perception that funds were stuck. The rsETH‑backed loans that created the hole couldn’t…
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