Mask Founder Suji Yan: Aave Can Absorb Bad Debts but Needs Strategic Investors
Suji Yan, founder of Mask Network, stated in a public speech that Aave's current bad debt issue is still within a controllable range. With the support of protocol profits, treasury resources, and the capabilities of the founding team, it is expected to achieve internal absorption. However, this will come at the cost of entering a "contraction period" for the next one to two years, and it will need to bring in strategic investors or "white knights" to share the pressure.
He also pointed out that Aave's current situation is significantly better than that of another DeFi project, Drift. On a broader scale, the Restaking model may pose a "devastating impact" on the industry, with some projects like ethfi potentially forced to shift towards simpler payment-related businesses. The DeFi sector as a whole may enter a multi-year adjustment period.
Source: Public Information
ABAB AI Insight
This judgment's core is not about a single project risk, but rather that DeFi is undergoing a typical "credit contraction cycle." If Aave's issues need to rely on profits and treasury coverage, it essentially indicates a deviation in the quality of collateral, liquidation mechanisms, or tail risk pricing in on-chain lending. DeFi has historically relied on over-collateralization to avoid credit risk, but during extreme volatility or liquidity exhaustion, this mechanism can still fail, converging towards the "bad debt cycle" seen in traditional finance.
The mention of introducing "white knights" signifies that DeFi is transitioning from "protocol self-consistency" to "capital backing." This is a structural shift: a system that originally emphasized trustlessness is beginning to require external capital for credit endorsement. This aligns closely with the logic of traditional financial crises where banks, sovereigns, or large institutions step in, marking that on-chain finance is being integrated into a broader capital structure rather than remaining an isolated system.
The negative judgment on Restaking points to the issue of revenue redistribution. Restaking captures value that originally belongs to different protocols and concentrates it in a few foundational layers, effectively creating an "interest rate siphon" within DeFi. When underlying revenues are siphoned off, the profit margins for upper-layer applications (lending, derivatives, liquidity protocols) are compressed, ultimately resulting in a slowdown of financial activities across the entire chain.
In the longer term, this impact is similar to historical phases of financial deleveraging: declining revenues, risk repricing, capital concentration, and the clearing of weaker projects. If DeFi enters a "small adjustment period," it does not mean demand has disappeared, but rather a shift from high-leverage growth to a reconstruction phase focused on low-risk, sustainable returns, with pricing logic transitioning from "TVL scale" to "real cash flow and risk control capabilities."