Aave unfroze WETH on Ethereum Core V3 on April 21. Opening exits before a loss-allocation plan is finalized creates a dynamic that is structurally disadvantageous to retail. Each withdrawal reduces the liquidity pool and enlarges each remaining supplier's pro-rata exposure to bad debt. By the time losses are socialized, the fewer WETH LPs remain, the larger the haircut each must bear. This does not disperse risk — it concentrates it on whoever exits last. The dynamic is amplified by asymmetric information access. Participants with technical tooling monitor repayment queues in real time and exit within seconds. Retail depositors cannot match that response speed. In scenarios of this kind, time advantage translates directly into loss avoidance. Kelp still holds substantial restaking ETH reserves, LayerZero remains solvent, and Arbitrum has frozen 30,766 ETH. Initiating a partial unfreeze before upstream responsibility is settled shifts the cost of that negotiation onto the slowest depositors to react — who are, overwhelmingly, retail.

Strongly agree, but LayerZero’s statement is clearly deflecting responsibility, and Aave doesn’t want to take the main blame either. They’ve probably already been arguing about it in the TG group.