Regarding the AAVE compensation incident this time, let's start with the conclusion: the risk of directly going to zero is not high, so everyone doesn't need to panic excessively, but from an investment perspective, it is strongly recommended to "stay away for now."

In terms of funding gap, the compensation issue is actually not a big deal. If nothing unexpected happens, the protocol reserve will cover about 200 million USD first, and the remaining several tens of millions will be borne by the stakers (stkAAVE). In fact, the protocol started selling assets from the staker pool as early as 10 a.m. today, and the pool itself contains quite a few stablecoins and Ethereum, so liquidation is very quick. Based on this disposal speed, the compensation funds are probably already enough, and affected users are likely to get their money back.
But even though the funds are sufficient, the real deadly issue is the subsequent "trust crisis." This is also the fundamental reason why a large number of users are frantically withdrawing funds now. Compared to this loss, what everyone fears more is: will the protocol make a second, or even third, mistake? If it happens again, the protocol treasury could be emptied, leaving only the few billion dollars from stakers as a guarantee, which is simply not enough. In decentralized finance, if trust cannot be restored, no one is safe from waking up tomorrow to find their money gone.
The collapse of trust is directly reflected in the data: today, the funds continuously flowing out have already approached 8.5 billion USD! It’s important to note that DeFi lending itself is not a high-profit industry; profit margins are not high, and it’s a thin-margin business that earns interest spread based on the scale of funds. The less money in the platform, the fewer fees it can earn. With such a large liquidity drain, AAVE’s future financial situation will definitely be tough.
Besides external fund outflows, internal risks are even more worrying. Recently, there has been a huge turnover of senior personnel at AAVE, and code is never perfect. Security depends not only on audits but also on a stable team.
To sum up: compensation is not a problem, but there’s no need to bottom fish. Instead of betting that there won’t be a third vulnerability, it’s better to let things settle for a while. At least wait for the new team to stabilize for half a year to a year, observe the stability of code updates and the inflow of funds before making decisions. For now, hold back, safety first. $AAVE