Aave Temporarily Freezes 17 Lending Markets
- The temporarily frozen lending markets include YFI, CRV, ZRX,MANA, 1INCH, BAT, ENJ, AMPL, DPI. RENFIL, MKR, xSUSHI, sUSD, USDP, LUSD, GUSD, and RAI.
- In order to improve its risk management, the protocol will no longer allow users to deposit or take loans with them on the platform.
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Decentralized lending protocol Aave passed a governance vote on 27 November, and will now temporarily freeze lending markets for 17 tokens considered to be volatile and with low liquidity.
According to the proposal, not allowing users to deposit or take loans in the 17 assets was needed for the sake of risk management, with its authors pointing out to the lower risk tolerance of community members in these markets. The frozen markets are considered as “volatile” due to their low liquidity profiles on Aave, and their reinstatement will depend on future liquidity and usage levels.
The affected lending markets are Yearn Finance (YFI), Curve Finance (CRV), 0x (ZRX), Decentraland (MANA), 1inch (1INCH), Basic Attention Token (BAT), Enjin (ENJ), Ampleforth (AMPL), DeFi Pulse Index (DPI), renFIL (RENFIL), Maker (MKR), and xSUSHI. Five stablecoins have also been frozen, including sUSD, USDP, LUSD, GUSD, and RAI.
The proposal was made shortly after a failed attack on CRV on Tuesday last week. At the time, a trader had borrowed 92 million CRV (around $60 million) on Aave, which were then sold to lower the price of the token. The attacker suffered a price sqeeze when the token’s price rallied, and while the protocol was able to liquidate his short position, it accured a bad debt of $1.6 million.
- An investigation from the New York Attorney General’s office has allegedly found that Gemini was aware of Genesis’ weak financial position, but still lied to investors.
- The lawsuit is looking to ban DCG, Genesis, and Gemini from the New York financial industry, seek restitutions for investments, and the return of “ill-gotten gains”.
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- Bankrupt crypto lender Genesis is trying to recover around $500 million from DCG, and another 4,550.5 BTC from DCGI, which it had loaned to the two companies in 2022.
- Both DCG and DCGI requested that the debts were converted to open loans on 9 May, but Genesis declined both offers and demanded the repayment of the loans with interest.
- Genesis reached an “agreement in principle” with DCG and its creditors back in February, which would have seen creditors recover roughly 80% of their funds.
- A group of creditors has now moved away from that agreement, forcing Genesis to request a court appointed bankruptcy mediator.