Temporary freeze of lending market on AAVE

Key points: 

• Lending markets of volatile and illiquid assets were frozen immediately after a successful governance proposal.  
• It follow a failed $60 million attack on CRV with USD Coin (USDC) as collateral.
• Assets on the list include YFI, CRV, ZRX, MANA, 1INCH, BAT, ENJ, AMPL, DPI, RENFIL, MKR, xSUSHI. 
• In addition to this, the protocol has suspended the following stablecoins: sUSD, USDP, LUSD, GUSD, and RAI. 
• The purpose of this move is to reduce the risk of AAVE version 2 and facilitate the eventual migration to version 3. 

Lending markets were frozen immediately after governance members passed a vote aimed at temporarily freezing assets deemed volatile and illiquid. Assets on the list include 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, Maker (MKR), and xSUSHI.

In addition to this, the protocol has suspended the following stablecoins: sUSD, USDP, LUSD, GUSD, and RAI. When assets are frozen, users cannot borrow assets or deposit assets into the protocol.

According to the proposal, the purpose of this move is to reduce the risk of AAVE version 2 and facilitate the eventual migration to version 3. The proposal also points to the current low-risk appetite among community members. However, the drafters of the proposal also emphasized that the next steps, which could be delisting or relisting, will depend on liquidity and usage levels.

The governance proposal follows a failed $60 million attack on CRV with USD Coin (USDC) as collateral. The attack failed due to an incorrect calculation of the liquidity level of the decentralized protocol. Nonetheless, contributors to the project developed a proposal to prevent further attempts to exploit the protocol.

Despite the turmoil in the broader crypto market, the decentralized finance (DeFi) protocol was able to raise $10 million in investment from a variety of investors including Bitfinex and Ava Labs. Last week, Cosmos-based ecosystem Onomy received funding to develop a new protocol combining DeFi and foreign exchange.