- Aave froze 17 v2 pools because of their low liquidity and volatile nature.
- An attack cost the Aave protocol $1.6 million in bad debt last week.
- AAVE’s price has decreased by almost 30% over the past month.
Earlier last week, Aave’s governance forum received a proposal urging the freezing of 17 v2 pools out of caution, given their low liquidity and the volatile nature of the underlying assets. The proposal received almost total support.
Aave v2’s YFI, CRV, ZRX, MANA, 1INCH, BAT (LON:BATS), sUSD, ENJ, GUSD, AMPL, RAI, USDP, LUSD, xSUSHI, DPI, renFIL, and MKR pools were halting. https://t.co/wfo70JSpMI— Wu Blockchain (@WuBlockchain) November 28, 2022
The execution of the proposal made by the Aave governance forum has stopped trading in the YFI, CRV, ZRX, MANA, 1INCH, BAT, sUSD, ENJ, GUSD, AMPL, RAI, USDP, LUSD, xSUSHI, DPI, renFIL, and MKR pools of Aave V2.
Avraham Eisenberg, the trader responsible for the recent $116 million Mango Markets exploit in October, shared a possible technique for well-funded entities to take advantage of the REN market on Avenue V2.
Eisenberg tried duplicating his “profitable trading approach” on November 22 by borrowing millions of CRV from Aave’s illiquid pool to short-sell the token.
After Curve published the whitepaper for its impending stablecoin, the price of CRV swiftly increased, making Eisenberg’s trades appear to have gone wrong because he faced losses up to seven figures. But the attack cost the AAVE protocol $1.6 million in bad debt.
Aave decommissioned these pools to safeguard against attacks since they targeted Aave’s CRV pool. Even if Aave claimed to have the resources to make up for the loss, the protocol is eager to prevent a recurrence of the situation.
The proposal urging the freezing of 17 v2 pools was in response to concerns about their liquidity and volatility.
However, the AAVE governance forum felt it was essential to take this precautionary measure to protect the protocol from possible attacks. As a result, AAVE’s price has decreased by almost 30% over the past month.
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