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

Odaily News: Marc Zeller, founder of 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, and the Aave Guardian had not yet frozen the Aave V3 Core pool's reserves (this action occurred 46 minutes later).

However, USDT is backed by real USD, 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%), this position will be liquidated just like any other.

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 want 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 upgrade the pool to force liquidation of the hacker (if the USDT liquidation threshold were lowered, it would affect all USDT depositors), but there is no real benefit to doing so, because the normal liquidation mechanism can easily absorb this debt.