Written by: Jocy, Founder of IOSG
$230 million in bad debt remains unresolved. Aave Collector holds over $200 million in liquid assets, and LayerZero just completed a $120 million funding round—both are fully capable of paying out. Aave has already lost $8.45 billion in TVL in less than two days, and the entire DeFi sector has evaporated $13.2 billion. This number continues to grow with each passing day.
But neither side has responded to who will be responsible for the stolen assets, and no one has made a statement. They are playing a game of cat and mouse with each other, while the entire DeFi ecosystem is bleeding.
Where did the DeFi spirit go in 2020?
On March 12, 2020, ETH plummeted to $80, and the on-chain liquidation auction failed to attract any bids, causing the price to drop to zero and MakerDAO to face a systemic collapse. At that time, the MKR Foundation stepped forward to propose auctioning MKR to buy back ETH to cover bad debts, and large community holders participated in the bidding.
That time, the Ethereum community and the DeFi spirit made everyone proud—in the face of crisis, there were people taking responsibility and taking action. And today? Silence. Many of my friends aren't just withdrawing funds from Aave—they're withdrawing funds from Spark and even other DeFi protocols. They're not panicking; they're voting with their feet: if this ecosystem can't even handle a 260M problem, why should we keep our money here?
Once these funds leave, they will never return.
Aave has experienced many governance crises in the past, with many people in the community holding differing opinions and disagreements never ceasing. But today is not the time to debate governance philosophies. Looking back at the prosperity of DeFi Summer, and looking back at the decentralized finance world we have built together—it hasn't been easy for us to get to where we are today. The future of DeFi should not be ruined by a moment of silence.
This isn't just Aave's problem. Spark, MakerDAO, and all DeFi protocols on Ethereum should be involved in coordinating this. Trust collapse doesn't discriminate between protocols; if this isn't handled properly, the TVL (Value at Least) of the entire DeFi ecosystem will be repriced, and everyone will suffer.
Time is extremely precious.
Aave could easily have first promised to cover the losses, then spent time coordinating specific solutions; this would have stopped the run on the project. If the project team continues to remain silent, @VitalikButerin should step in to mediate—no money needed, just a simple "this matter will definitely be resolved properly" would suffice.
For every hour of silence, more funds are permanently lost.
We urge @StaniKulechov, @VitalikButerin, @AaveDAO, @KelpDAO, @LayerZero_Core, and @RuneKek to communicate publicly as soon as possible and give the market a clear signal.
Silence is the worst option.
