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Aave freezes some lending markets due to low liquidity

Following a governance vote, decentralized lending protocol AAVE has temporarily frozen certain markets for 17 cryptocurrencies. As a result, AAVE V2 users would no longer be able to deposit or use 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

Aavelargest lending protocol across all blockchains by total value locked (TVL), a frozen 17 loan markets on AaveV2 following a governance vote issued in response to attempted price manipulation on the CRV token last week.

Said proposal, applied to the governance forum on November 23 and accepted on November 27 with a 100% positive response ratevice to freeze the following assets on Aave V2:

  • Tokens : (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 specified here will only be no longer available for loan or borrowing on Aave V2 in order to limit the risk of market manipulation.

Last week, the individual known to have manipulated Mango Marketsknown by the pseudonym “Avi” on Twitter, had attempted to manipulate the price of CRV in order to short and generate a profit on the operation.

However, although the manipulation did not have the proposed effect following a rebound in CRV which caused the liquidation of the position of our hackerAave still ended up with a poor service (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 the but 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 aimed at supplementing the one set out above is underway on Aave’s governance forum.

This proposal, put forward by users of 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 indeed proven to be accepted, this proposal will cancel the freezing function previously put in place 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 practically adopted with 99.58% of positive votes at the time of writing these lines.

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Sources: Proposal originalproposal In progress

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