Fluid extended its aWETH Redemption Protocol to L2 networks, launching first on Arbitrum and Base. The solution allows Aave users to swap their frozen aWETH collateral for wstETH or weETH, for a fee of roughly 2%. On Ethereum mainnet alone, the protocol has already facilitated $400 million in aWETH redemptions.

The service helps protocols unwind looped Aave positions more efficiently. It works by pairing protocols running looping strategies with WETH lenders on Aave. Initial liquidity was absorbed within hours of launch, and the pool is expected to be replenished. EtherFi also launched an aWETH redemption tool for Ethereum mainnet.

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Fluid launched the aWETH Redemption Protocol, allowing Aave lenders to swap aWETH collateral for wstETH or weETH at a cost of approximately 2%. The service aims to help Aave users stranded by the market cascade amid frozen markets on Aave following the KelpDAO bridge exploit. It allows users to regain control of a liquid, unaffected collateral asset without needing to close or unwind their position.

Fluid is able to offer the service because it operates a leveraged looping vault holding $144 million in Aave positions that it is looking to unwind. By buying aWETH from trapped lenders and using it to repay its own ETH debt on Aave, Fluid simultaneously frees users, creating a mutually beneficial solution. The solution currently only supports swaps on Ethereum mainnet.

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Disclaimer: Content is for informational purposes only, not endorsement or investment advice. The accuracy of information is not guaranteed.