ACI Founder: Binance Hacker's Debt Accounts for Only 0.9% of Aave's Total wETH Reserves, Easily Absorbed by Liquidation Mechanism

Odaily Report: Marc Zeller, founder of the Aave Chan Initiative (ACI), posted on X stating that the Aave protocol is fine.

The Binance hacker injected 60 million USDT into the protocol within just 3 minutes and borrowed 19,762 wETH (approximately $44.9 million), at which point Tether had not yet frozen the address, nor had the Aave Guardian frozen the Aave V3 Core pool's reserves (this operation occurred 46 minutes later).

However, USDT is backed by real dollars, and from the protocol's perspective, although this position is the proceeds of crime, it is overcollateralized — with a health factor of 1.04, holding $59.9 million in collateral against $44.9 million in debt.

Of course, the protocol now has a large borrower with little incentive to repay the loan, but the liquidation mechanism will still operate as usual. If the ETH price rises above approximately $2,365 (+4%), the position will be liquidated just like any other position.

Currently, the Aave V3 Core pool's total wETH reserves stand at 2.16 million wETH, and the hacker's debt accounts for "only" 0.9% of that, so Aave does not need to take any special action against the hacker. There are currently 345,000 wETH available (capital utilization rate of 81.6%), so if wETH depositors wish to withdraw, liquidity is fully sufficient. There is no reason or need for a bank run to occur.

This situation is far less alarming than the Kelp hacker incident (which involved zero-value collateral). In theory, a governance proposal could be passed to force liquidation of the hacker by upgrading the pool (if the USDT liquidation threshold were lowered, it would affect all USDT depositors), but there is no practical benefit to doing so, as the normal liquidation mechanism can easily absorb this debt.