The decentralized lending protocol Aave has decided to “temporarily” halt its lending services in 17 markets, citing excessive volatility that could potentially lead to attempts at market manipulation.
This decision was made following a governance vote on the matter, where nearly all members voted in favor of the proposal. Specifically, less than 0.01% of AAVE holders opposed the proposal, while almost 100% supported it.
The proposal outlined, “A proposal to make parameter changes on Aave V2 ETH. Given that the market situation of these assets is currently volatile, out of an abundance of caution, we recommend temporarily freezing the following markets.”
The Aave protocol has temporarily suspended lending services for 17 cryptocurrencies, which includes five stablecoins: sUSD, USDP, LUSD, GUSD, and RAI.
The other affected assets encompass Yearn Finance (YFI), Decentraland, 1inch (1INCH), Curve Finance (CRV), 0x (ZRX), Basic Attention Token (BAT), Enjin (ENJ), RENFIL, MakerDAO (MKR), xSUSHI, Ampleforth (AMPL), and DeFi Pulse Index (DPI).
This suspension means that users are unable to take loans against these assets or deposit them within the Aave protocol. The decision to freeze these assets is driven by Aave’s aim to mitigate risk to Aave version 2 and encourage the eventual migration to version 3 of the protocol.
Failed $60-Million Attack on Aave
Aave’s recent governance proposal comes in the aftermath of a $60 million short attack on its CRV pool using USDC as collateral earlier this month. Fortunately, the attack was thwarted due to a miscalculation of the decentralized protocol’s liquidity levels.
Addressing the issue on Twitter, the Aave protocol stated, “The Aave ecosystem was built with a number of mechanisms that the Aave community can deploy to cover events like this, including the Safety Module, the Ecosystem Reserve & the DAO Treasury.”
The attacker in this incident was identified as Avraham Eisenberg, the same individual who exploited the Solana-based DeFi lending platform Mango Markets. Eisenberg referred to his actions as “a highly profitable trading strategy.” Notably, he had previously faced accusations of stealing treasury funds from Fortress DAO, a fork of Olympus DAO operating on the Avalanche blockchain, where he served as a lead developer.
Despite the security incident, CRV has shown some gains. The token is currently trading at $0.671433, reflecting a 4.4% increase over the past day. Additionally, the coin has experienced a more than 33% increase over the past month.