Following a governance vote, decentralized lending protocol AAVE has temporarily frozen certain markets for 17 cryptocurrencies. As a result, AAVE V2 users will no longer be able to deposit or borrow the affected assets. The decision was prompted by the events that occurred last week regarding an attempted manipulation on the CRV token.
AAVE takes the lead
AAVEthe largest lending protocol across all blockchains by total value locked (TVL), has frozen 17 loan markets on AAVE V2 following a governance vote issued in response to attempted price manipulation on the CRV token last week.
Said proposal, launched on the governance forum on November 23 and accepted on November 27 with a 100% positive response rateaims to freeze the following assets on AAVE V2:
- Tokens : yearn.finance (YFI), Curve DAO (CRV), 0x (ZRX), Decentraland (MANA), 1inch, Basic Attention Token (BAT), Ampleforth (AMPL), DeFi Pulse Index (DPI), renFIL, Maker (MKR) ), Enjin (ENJ) and xSUSHI;
- stablecoins : sUSD, GUSD, RAI, USDP and LUSD.
Thus, the cryptocurrencies listed here will only be no longer available for lending or borrowing on AAVE V2 in order to limit the risk of market manipulation.
Last week, the individual known to manipulate Mango Markets, known as “Avi” on Twitter, attempted to manipulate the price of CRV in order to shorts and generate a profit on the operation.
However, although the manipulation did not have the desired effect following a rebound in the price of CRV which caused the liquidation of the position of our hackerAAVE still ended up with a bad department (or bad debt) of $1.3 million.
Also, the decision made here by AAVE (among others) aims to reduce the possibility that such an event could reoccur :
“Out of an abundance of caution and given the low risk tolerance of the community, we recommend temporarily freezing the assets described above in an effort to de-risk Aave V2 and promote an eventual migration to V3. »
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New measures coming soon on AAVE?
A second governance vote to supplement the one set out above is underway on AAVE’s governance forum.
This proposal, issued by users Llama and Chaos Labs, essentially aims to no longer completely freeze the cryptocurrencies concerned, but rather to simply prevent borrowing. Thus, AAVE V2 users could continue to deposit these assets on the platform.
This proposition will however include the following additional cryptocurrencies : ENS, LINK, UNI and SNX.
If it were indeed to be accepted, this proposal will cancel the freezing function previously implemented and will impose a more flexible system for all the assets concerned.
Although there are still 6 p.m. to vote, the proposal is already almost adopted with 99.58% of positive votes at the time of writing these lines.
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Sources: Original proposal, current proposal
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make the blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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