fbpx
Skip to content Skip to sidebar Skip to footer

Aave Freezes Asset Lending to Prepare for Protocol Upgrade

Aave, a decentralised finance (DeFi) system, has decided to halt borrowing and lending of assets in its Ethereum liquidity pool in order to reduce risk and get ready to upgrade its protocol. This decision was made following a voting process participated by its token holders.

With $5.6 billion in liquidity secured throughout six chains in the protocol, it is the largest Ethereum liquidity pool on Aave. The trading of 17 assets — namely Curve (CRV), 1inch (1INCH), Yearn Finance (YFI), and several other stablecoins — will be discontinued.

The proposal, created by DeFi infrastructure provider Gauntlet Network, aims to reduce the risk of Aave accumulating bad debt. According to the company, it will assist with the protocol’s transition from version 2 to version 3 by allowing users to transfer their assets to the upgraded network.

The proposal, according to Nick Cannon, VP of Growth at Gauntlet, was also based on the concerns surrounding the Curve token’s insolvency. After a trader borrowed 20 million CRV from Aave to the cryptocurrency exchange OKX, causing the coin to be shorted and its value to start plunging, Aave had $1.5 million in bad debt.

While it is subjective to the Aave community whether or not these tokens come back online, it can be assumed that they will most likely be re-introduced in the protocol supported by its v3 chain. Additionally, he mentioned that these tokens make up around 5% of Aave’s TVL.

On Sunday, two distinct motions to halt borrowing on Uniswap (UNI) and Chainlink (LINK) were approved. These tokens were included in the Ethereum liquidity pool, according to Cannon, in an effort to incorporate “robust tokens” to protect the assets.

Over the past year, the protocol has slowly and steadily added more assets to its v3 network. Aave founder Stani Kulechov announced in January that the protocol would start rolling out its v3 upgrade across seven chains, which includes Ethereum.

In a poll conducted off-chain on Monday, the Aave community opted to let users move 26 assets in the Ethereum liquidity pool to the v3 network.

The new version of Aave at the present run on layer 1 networks including Avalanche, Fantom, and Harmony, along with layer 2 networks like Arbitrum, Polygon, and Optimism that are built on Ethereum.

Leave a comment

About SuperCryptoNews

SuperCryptoNews is a global leading blockchain & crypto news provider, covering daily news focused on trading and investment developments in bitcoin and crypto. We bring you expansive crypto news coverage around the world. We offer many thought leadership opinions from blockchain experts and leaders of the industry.

Subscribe to SCN

© Copyright of Novum Global Consultancy Pte Ltd {2020, 2021}. All rights reserved.

111 North Bridge Road, 21-01, Peninsula Plaza, Singapore 179098.

Phone: +65-80282938

Contact Us   |   T&Cs   |   Privacy Policy   |   About Us

About SuperCryptoNews

SuperCryptoNews is a global leading blockchain and crypto news provider, covering daily news on the latest tech and trading developments in crypto. We bring you expansive crypto news coverage especially in Asia, with a focus on Singapore, Thailand and Southeast Asia.

Follow Us On

© Copyright of Novum Global Consultancy Pte Ltd {2020, 2021}. All rights reserved.

Contact Us   |   T&Cs   |   Privacy Policy   |   About Us