Elliscope🧑‍🚀

The Arbitrum Security Council has taken emergency action to freeze the 30,766 ETH being held in the address on Arbitrum One that is connected to the KelpDAO exploit. The Security Council acted with input from law enforcement as to the exploiter’s identity, and, at all times, weighed its commitment to the security and integrity of the Arbitrum community without impacting any Arbitrum users or applications. After significant technical diligence and deliberation, the Security Council identified and executed a technical approach to move funds to safety without affecting any other chain state or Arbitrum users. As of April 20 11:26pm ET the funds have been successfully transferred to an intermediary frozen wallet. They are no longer accessible to the address that originally held the funds, and can only be moved by further action by Arbitrum governance, which will be coordinated with relevant parties.

Feels like pooled lending protocols would benefit from a rate limit on the supply of an asset being deposited for collateral Like, if the current supply is 100m and the supply cap is 300m, the supply should only be allowed to go to 110m in the next 10 minutes. Nobody needs to deposit all 200m in one shot This matters because if/when an exotic asset is hacked, the impact of the hack is constrained by the size of the exit paths for that asset. Especially when you consider that many hacks are infinite mint bugs… there the size of the exits literally determines the size of the hack. Lending protocols are often the largest exits (DEX liquidity is usually pretty small). Having a “smart cap” that is a bit above current supply, which can adjust over a few hours to the true cap, would make a huge difference. It would have saved rsETH depositors $200m today This also raises an interesting point: asset issuers should want this too. If you are an asset issuer who issues receipt tokens which have a redemption delay, then you actually aren’t worried about a hacker redeeming with you. But you need possible exits to be as small as possible while not impeding normal users. High supply caps need to be seen as a liability, rather than a sign of stature.

The rsETH markets on Aave V3 and Aave V4 have been frozen. Aave's contracts have not been exploited and this is an exploit related to rsETH. The freeze follows an exploit of the Kelp DAO rsETH bridge. Freezing the rsETH markets prevents new deposits and borrowing against rsETH collateral while the situation is assessed. We are reviewing information about rsETH borrows on Aave that occurred after the exploit and will share more details as soon as possible. If the protocol accumulates bad debt from this incident, we'll explore paths to offset the deficit.

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