The open source Aave protocol enjoys great notoriety in the field of decentralized finance. It allows its users to lend and borrow cryptos. But this activity will now only be partially available. Why ?
An attack on Aave at the basis of the decision
The Decentralized Autonomous Organization (DAO) of Aave has decided to to suspend part of its lending and borrowing business. The suspension for an indefinite period covers 17 tokens including 5 stablecoins. It concerns the following digital assets: Curve Finance (CRV), 0x (ZRX), Yearn Finance (YFI), Decentraland (MANA), Enjin (ENJ), Ampleforth (AMPL), 1inch (1INCH), Basic Attention Token (BAT) , xSUSHI, Maker (MKR), DeFi Pulse Index (DPI) and RENFIL. For stablecoins, there are sUSD, USDP, LUSD, GUSD and RAI.
The crypto entity’s initiative comes after an attack that ended in failure overall. But it created a bad debt of $ 1.6 million for the protocol. The gap made the digital assets covered by the DAO decision volatile and illiquid.
“Earlier this month, Avraham Eisenberg, a known hacker in the ecosystem, who can be described as a malicious trader, because his actions do not amount to a hack, but to market manipulation, realized various operations in order to generate profits. His strategy, however, did not work this time around. The trader, for his part, lost millions of dollars (…) Given that the market situation for these assets is currently volatile, out of an abundance of caution, we recommend temporarily freezing the following markets”. This is what we read in the proposal of the DAO, which was then voted on unanimously.
The measure will minimize the risk for version 2 of Aave and promote the eventual migration to version 3.
From now on, users of the Aave protocol will no longer be able to deposit or take out loans with these 17 tokens. The company is preparing for a new action plan. This could consist of withdrawing or re-listing these cryptos. This will mainly depend on liquidity and usage levels.
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