Delphi Digital has identified a significant structural flaw in Aave's lending model, revealing an annual deadweight loss of $52 million in its top three markets: WETH, USDT, and USDC. These markets, which constitute 89% of Aave's total borrowings, suffer from supply rates that are 25%-35% lower than borrowing rates. This discrepancy results in losses nearly equivalent to half of Aave's annualized revenue from the first quarter. Even with the elimination of the reserve factor, a $36 million loss would persist. The issue was further highlighted by the KelpDAO bridge attack on April 18, where attackers exploited $292 million in rsETH on Aave, leading to $200 million in bad debt and freezing utilization rates at 100% for five days in major markets like WETH.