As pressure on DeFi markets intensifies following the KelpDAO-related exploit crisis, leading industry commentator 0xQuit has issued a remarkable warning. According to the analyst, the situation on Aave is “bad and getting worse.”
0xQuit said in its assessment that several liquidity pools on Aave had reached 100% utilization. This, they explained, was causing lenders to be excluded from the system and exposing the protocol to additional risk of “bad debts”.
The analyst also argued that lending rates have increased to 10-15%, but that this return is insufficient compared to the risk of financing a potential deficit of around $300 million. 0xQuit said the biggest uncertainty in the market is who will bear the rsETH losses, adding that the panic may dissipate somewhat once this question is clarified.
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On the other hand, it was noted that the lack of sufficient communication from Aave and relevant infrastructure providers (e.g. LayerZero) in the current process has increased uncertainty. 0xQuit said: “Markets don’t like uncertainty. »
According to the analyst, even with clarity, it will take time for trust in DeFi, especially Aave, to return to previous levels after this event. However, if the uncertainty is resolved, the system could resume operation, albeit at lower total value locked (TVL) levels.
*This does not constitute investment advice.
