The Aave community, which is governed by AAVE token holders, has approved a governance vote that will see the protocol’s low liquidity asset pools, such as CRV and MANA, decommissioned.
The Predlog went live on 23 November following an attempted exploit on Aave’s pool by Avraham Eisenberg, the perpetrator behind the attack on Mango Markets last month, which led to a loss of $116 million.
The attack that prompted the proposal
On 22 November, Eisenberg attempted to replicate the attack he carried out on Mango Markets, this time with Aave. This basically involved borrowing millions of Curve DAO tokens (CRV) from Aave’s already illiquid pool, with the intention to short-sell them.
Prema on-chain analitičkoj firmi Lookonchain, Eisenberg borrowed $9.9 million worth of CRV. $4.9 million was then transferred to OKX, a crypto exchange based in Seychelles.
Ogroman $ CRV kraće posuđeno 20M $ CRV(9.9 miliona dolara) od #Ave i preneseno 10 miliona $ CRV(4.9 miliona dolara) za #OKEx.
Pozajmio je 37 miliona $ CRV od #Ave u posljednjih 7 dana.
Cijena od $ CRV pao je sa 0.625 dolara na 0.464 dolara, što predstavlja pad od oko 26%.
Sada baca 20M $ CRV pozajmio je! pic.twitter.com/sSiMqEE5C3
— Lookonchain (@lookonchain) Novembar 22, 2022
CRV dropped 26% almost immediately, going from $0.625 to $0.464, as the perpetrator rapidly dumped the borrowed tokens.
However, CRV soon bounced back after Curve released the whitepaper for its upcoming stablecoin. Thus, Eisenberg’s strategy backfired, leading to a 7-figure loss for him.
nakon
Although the exploit was unsuccessful, it still left Aave with bad debt worth $1.6 million. Aave has since covered the loss, but has no intention of leaving their protocol vulnerable to such exploits in the future. The day after the attack, the developers put forth a proposal on the governance forum, which sought to freeze more than a dozen of its liquidity pools.
Prijedlog je glasio,
“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: YFI, CRV, ZRX, MANA, 1inch, BAT, sUSD, ENJ, GUSD, AMPL, RAI, USDP, LUSD, xSUSHI, DPI, renFIL, and MKR markets.”
The proposal was approved with an overwhelming majority, with less than 0.01% voting against it.
Aave attempts to minimize risk
In addition to the recently concluded proposal, there are others that are either underway or are lined up. These proposals seek to minimize the risk for the protocol, given the volatile market conditions.
For instance, the “Risk Parameter Updates for Aave V2 Polygon,” which is currently aktivan, seeks to migrate six markets, including CRV and SUSHI, to Aave V3.
Source: https://ambcrypto.com/aave-community-approves-governance-vote-to-decommission-low-liquidity-asset-pools/