content editor @0xblockwire, prev. @realvision, @abc. following ethereum, defi & whatever's happening onchain.
New York, NY
Joined June 2015
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the great news is that pretty much all of this is totally preventable
ethereum and ETH are rapidly growing to global ubiquity. this doesn't change that one bit
future defi solutions won't make these amateur errors (they'll eventually seem like amateur errors... already do to many experts)
attacker supremacy from AI won't last, it's working through a backlog of exploits. the limit result will be much permanently more secure protocols and eth's neutrality and capital gravity well will be more valuable than ever
if you have ETH lent in aave, imo you should get out right now by using onchain limit orders to sell to whale loopers who are actively buying aETH unwind leverage. you can take as little as a 1.1% haircut based on ongoing txns in mid 6-figs, which is much lower than some estimates of final socialized losses.
why can ETH lenders take only a 1.1% haircut now? because loopers want to avoid liquidation from high rates caused by 100% utilization. on the bad debt side, loopers actually win from socialized losses because their debt token (aETH) is the one taking the haircut, so they'd owe less in ETH terms.
the most remarkable thing in this crisis is clearly that billions of dollars in backbone eth lending on aave were in fact exposed to signer risk in a 3rd party bridge... effectively some random downstream fellow was actually an aave admin.
aave additionally has negligently low borrow rates during 100% utilization, leading to extremely dangerous illiquidity. what if ethusd crashed for any reason... eg. if stocks were open and a politician said the wrong thing, btc goes down 5%, eth goes down 8%... this can lead to broader contagion and bad debt.
protocols and their teams like fluid (who've had low level dynamic withdrawal rate limits in protocol from day 1 so can't be insta drained) and spark (who seem to have excellent scientific gov and no exposure for eth lenders to 3rd party bridge admins) deserve respect and attention for doing what they knew was right and possible even before the ecosystem had a forcing function to care about it. same goes with other kinds of security practices that are still fringe, maybe including formal verification and ipfs hashes for frontends
nearly 24h since the attack, the lack of material updates from affected protocols, including kelp, layerzero, and aave, suggests to me the ongoing severity of the situation. many factors are in play, there's probably no great solution, somebody is going to lose big
is just the bridged rsETH (that argubly took bridge risk intentionally) fully on the hook for the bridge failure, and L1 rsETH should be unaffected? however L1 rsETH *was* affected due to gov choices in aave. does aave's junior debt program, umbrella, take the full wipeout? however umbrella's terms & conditions say they have no bridge risk, which aave gov effectively violated without umbrella holders realizing it. does layerzero bear responsibility for allowing their users to be subject to terrible admin config in one of their ecosystem bridges? i'm probably missing aspects here, it's very messy.
Just Use Aave is dead... nobody is going to Just Use Anything anymore
the future of this industry is to do the smart obvious stuff even when it's unpopular, like withdrawal rate limits, better interest rate gov, avoiding toxic market share steroids like degen bridge looping affordances.
and for 10x better user recognition and higher standards around protocol hygiene and security differentiation. degen stuff is fun and amazing but only when you understand the true risks
in sum, if you are lending ETH in aave, get out now at a ~1.1-1.5% haircut by selling to loopers actively unwinding because when the dust settles, a material haircut for Aave v3 ETH lenders is a possibility
ethereum and ETH are growing well to global ubiquity and will be massive net beneficiaries of our industry successfully navigating this crisis season of backlogs of exploits discovered by AI and preventably poor practices in defi architecture/gov. trillions await
Thea Høghgaard retweeted
“Bitcoin was the first distributed systems paper I read with an economic layer built into it — and that changed everything.”
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Avery reflects on discovering Bitcoin and recognizing how economic incentives could transform distributed systems, a realization that eventually shaped his decision to co-found Aptos Labs.
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We discovered a sophisticated recording device that was hidden inside one of our offices. We used our models to understand the device and where it had come from, identifying that a specific employee had planted it a few days earlier. We referred the matter to the FBI, and we’re grateful to the agents and prosecutors who moved quickly to make an arrest. The FBI’s investigation is ongoing and we will continue to support their work.
At this time, we have no indications of this individual inappropriately accessing or exfiltrating model weights, source code, or customer data. The employee was terminated.
We take protecting our technology, data, and people seriously, and as a matter of national importance. Our security program is designed to protect against a wide range of threat actors, from insider risks to cybercriminals to nation states, and this case is an example of how AI can help address these sophisticated security threats.
Thea Høghgaard retweeted
“We focused on four core areas: finance, gaming, social, and entertainment — but DeFi has gained the most traction on @Aptos.”
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Thea Høghgaard retweeted
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In this conversation, @sachi_morikawa joins @michaelh_0g, Founder of @0G_labs, to examine the evolving landscape of data availability and the performance demands of AI-native blockchain systems.
They explore how 0G compares with Celestia, Avail, and EigenDA, why throughput must increase by orders of magnitude, and how overcoming broadcast bottlenecks and integrating decentralized storage could transform data ingestion and retrieval.
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Thea Høghgaard retweeted
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Thea Høghgaard retweeted
In this week’s episode, we welcome Michael Heinrich (@michaelh_0g), Founder of 0G Labs (@0G_labs), for an in-depth conversation on the future of decentralized artificial intelligence, next-generation blockchain infrastructure, and the mindset required to build transformative technology.
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Thea Høghgaard retweeted
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Thea Høghgaard retweeted
In Web3, your reputation isn't defined by your background, but by the ideas you share and the things you build.
@kenzi_morikawa sits down with DC Builder (@dcbuilder) to explore the rise of pseudonymous identities in crypto and how an open, merit-driven culture is reshaping the way people establish credibility.
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Thea Høghgaard retweeted
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We discuss Worldcoin’s vision for global identity and financial inclusion, the challenges of verifying personhood at scale, and how zero-knowledge technology, Semaphore, and privacy-preserving systems could redefine digital trust.
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Thea Høghgaard retweeted
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