Aave's Bad Debt on Arbitrum May Drop 80% After Fund Seizure

2026-04-21 16:46

DefiLlama founder 0xngmi has indicated that Aave's bad debt on Arbitrum could significantly decrease following a strategic allocation of seized funds. If Arbitrum prioritizes these funds for the AAVE market and all rsETH shares in the impairment, Aave could eliminate its bad debt on Arbitrum entirely. Alternatively, if only the mainnet rsETH value is protected, Aave's bad debt on Arbitrum could be reduced by 80%, from $88 million to $17 million.

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