The discussion primarily revolves around an issue identified by Bgdlabs with the Reserve Factor (RF) on Aave v2 Ethereum, specifically concerning the FEI asset. The problem arose after the execution of Aave governance proposal 96, which froze the FEI asset and redirected all yield to the protocol's Collector by setting the RF to 100%. However, this configuration led to an unintended side effect where the variable borrow interest was not accruing for FEI borrowers. This issue also affected the supply index and the variable borrow index, preventing the growth of aToken and the accrual of borrowers' debt over time. Furthermore, no RF aTokens were minted for the Collector due to the lack of perceived yield accumulation¹.

Bgdlabs proposed a two-step solution to this problem. The first step involves reducing the RF to 99%, which would resolve the issue without halting borrowers' debt growth. The second step calls for a fix on both Aave v2 and Aave v3 to allow 100% RF on assets without causing unintended side effects. Llamaxyz confirmed that they are working on a proposal to adjust the FEI Reserve Factor from 100% to 99%².

In response to Lbsblockchain's query about the accrued debt since the execution of Aave Governance Proposal 96, Bgdlabs clarified that while the exact figures are unknown, the amount is likely substantial. However, they reassured that this does not affect the supply side as all debt accrual should have been redirected to the Aave protocol Collector⁵. The discussion concluded with the consensus that the proposed solutions should be implemented to rectify the issue and prevent similar problems in the future.