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DefiLlama Founder: Arbitrum Prioritizing Seized Funds for Aave Market Could Cut Bad Debt by 80%

GateNews
Project ProgressOn-Chain Data
ARB0.68%
AAVE-0.52%

Gate News message, April 21 — According to DefiLlama founder 0xngmi, if Arbitrum prioritizes using seized funds for the Aave market on Arbitrum, bad debt could be significantly reduced. Under a "loss socialization" scenario, Arbitrum would face no bad debt at all; if rsETH on the L2 faces a zero-risk scenario, Arbitrum's Aave bad debt could decrease by approximately 80%, from $88 million to $17 million.

0xngmi's analysis suggests that strategic allocation of seized funds could substantially mitigate credit risk exposure in the Arbitrum ecosystem.

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