How will Kelp socialize the losses?
Option 1: Holders of bridged rsETH on alt chains get burnt
- minimize the number of people affected
- can't tap into Umbrella on Aave Core
- No losses for aWETH holders
- establish the precedent of bridged assets being 2nd-class citizens
Option 2: All holders of rsETH take the same haircut
- more people are unhappy
- mass liquidations on Aave
- Umbrella covers the remaining bad debt
- aWETH is made whole eventually
Option 3: Take a pre-exploit snapshot
- most people holding rsETH are happy-ish
- loss is socialized among aWETH holders after the Umbrella backstop
- Kelp is forever banned from DeFi
- Kelp may get sued by Aave (scarier than being sued by individual rsETH holders)
https://x.com/0xedenau/status/2045769191513629155
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