defillama founder 0xngmi said that if Arbitrum prioritizes using frozen funds for the AAVE marketplace on Arbitrum, AAVE 's bad debt could be significantly reduced.
This analysis was posted by 0xngmi on X on April 21st. He outlined two scenarios: under the loss Chia mechanism, AAVE on Arbitrum would no longer have bad debt; and if rsETH on L2 were abandoned, bad debt would decrease from $88 million to $17 million.
The reduction in the second scenario is equivalent to 80%. This information is presented in the context of Arbitrum being mentioned as a party that could prioritize allocating frozen funds to the AAVE market on this network.
