AAVE Closes Credit Markets Momentarily to Prevent Additional Attacks

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Last Updated on November 29, 2022 by Bitfinsider

Protocol for decentralized liquidity Aave has temporarily banned loan markets for 17 tokens to protect against volatility concerns that might lead to more market manipulation efforts.

The lending markets were froze immediately after the governance members voted to temporarily freeze assets deemed volatile and low in liquidity. Yearn.finance is mentioned in the list of assets , Curve Finance (CRV), 0x (ZRX), Decentraland (MANA), 1inch (1INCH), Basic Attention Token (BAT), Enjin (ENJ), Ampleforth (AMPL), DeFi Pulse Index (DPI), RENFIL, and Maker (MKR) are a few of the cryptocurrencies in the top 10.

In addition to these stablecoins, the protocol has stopped sUSD, Pax Dollar (USDP), Liquidity USD (LUSD), Gemini Dollar (GUSD), and RAI. When assets are frozen, users cannot borrow against them or deposit them to the protocol.

According to the plan, the change is intended to lower the risk associated with Aave v2 and encourage the eventual migration to v3. The plan also highlighted the current reduced risk tolerance of community members. However, the proposal’s authors also noted that the following step, which may involve delisting or relisting the markets, would depend on liquidity and usage levels.

The governance idea follows an unsuccessful $60 million USD Coin assault on CRV (USDC)

as collateral. Due to an error in calculating the liquidity levels of the decentralized protocol, the assault failed. However, participants to the project worked on a proposal to prevent future efforts to attack the protocol.

A decentralized finance (DeFi) system was able to gather $10 million in funding from companies such as Bitfinex and Ava Labs despite the volatility of the larger crypto market.

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