To prevent attacks, Aave shuts down CoinEdition low-liquidity pools

To prevent attacks, pools with low liquidity should be shut down

• Aave has frozen 17 v2 pools due to their low liquidity and volatility.
• An attack cost the Aave protocol $1.6 million in bad debt last week.
• AAVE’s price is down nearly 30% over the past month.

Earlier last week, Aave’s governance forum received a proposal calling for the freezing of 17 v2 pools as a precautionary measure given their low liquidity and the volatility of the underlying assets. The proposal received almost unqualified support.

Aave v2’s YFI, CRV, ZRX, MANA, 1INCH, BAT (LON:), sUSD, ENJ, GUSD, AMPL, RAI, USDP, LUSD, xSUSHI, DPI, renFIL, and MKR pools have been paused. https://t.co/wfo70JSpMI

— Wu Blockchain (@WuBlockchain) November 28, 2022

YFI, CRV, ZRX, MANA, 1INCH, BAT, sUSD, ENJ, GUSD, AMPL, RAI, USDP, LUSD, xSUSHI, DPI, RENFIL and MKR have discontinued Aave V2’s trading pools.

Avraham Eisenberg, the trader responsible for Mango Markets’ recent $116 million exploit in October, shared a possible technique for well-funded companies to take advantage of the REN market on Avenue V2.

Eisenberg attempted to duplicate his “profitable trading approach” on Nov. 22 by borrowing millions of CRV from Aave’s illiquid pool to short the token.

After Curve released the white paper for its forthcoming stablecoin, CRV’s price quickly surged, which seemingly went awry for Eisenberg’s trades as it suffered losses in the seven figures. But the attack cost the AAVE protocol $1.6 million in bad debt.

Aave decommissioned these pools to protect against attacks as they targeted Aave’s CRV pool. While Aave claimed to have the resources to make up for the loss, protocol is committed to preventing the situation from repeating itself.

The proposal to require freezing of 17 v2 pools was in response to concerns about their liquidity and volatility.

However, the AAVE Governance Forum felt it was imperative to take this precautionary measure to protect the protocol from possible attacks. As a result, AAVE’s price has fallen nearly 30% over the past month.

To Prevent Attacks, Aave Decommissions Low Liquidity Pools post appeared first on Coin Edition.

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