- Kelp DAO suffered a $292 million hack which created a $260 million net debt on AAVE.
- It costs $110k every day just to roll on the positions and avoid getting liquidated.
- If the positios gets liquidated, user trades could also be forcibly liquidated on AAVE.
- Suggest to withdraw funds from MEXC at least for the short term.
Kelp DAO Hack Puts AAVE on Life Support
A $292 million hack on Kelp DAO in AAVE, had resulted in MEXC exchange almost getting liquidated on AAVE. The hack and its impact has been claimed officially by the exchange is legitimate threats. On 20 April, Kelp DAO was hacked which operated a bridge on the AAVE blockchain.
The hack reportedly created a $260 million net debt which remains troublesome. If the platform decides to continue its positions, it has to pay $110,000 per day for rollover and margin requirements. Inability to pay will trigger liquidations for its users.
Not only its users, several other ecosystem partners could also be effected if liquidations take place. AAVE has already lost 15%, falling from $112 to $94 at press time. This loss could directly benefit its competitors.
Further, since this is a bearish market, one such trigger could cause a bank run for every associated liquidity pool and DeFi platforms.
Further Liquidations Could Impact Ethereum
If AAVE undergoes liquidation, it could also result in cascading liquidations in Ethereum since AAVE is a part of the Ethereum Ecosystem. AAVE and Ethereum share several liquidity pools such as Rocketpool. Further, in DeFi, the crash or collapse of any system, for whatsoever reason, impacts its peers very dearly.
Users Suggested to Withdraw Funds
We at BFM Times suggest readers and crypto users to end their positions on the exchange and withdraw funds at least for a short period of time to ensure that if the exchange gets liquidated personal investments are not affected.
Similar incidents have happened in the past resulting in massive liquidations and even shutting down of the blockchain.
Disclaimer: BFM Times acts as a source of information for knowledge purposes and does not claim to be a financial advisor. Kindly consult your financial advisor before investing.
