The Aave Community Votes on Proposals to Reduce Protocol Exposure to Curve DAO Token
The Aave community is taking steps to minimize its protocol exposure to the Curve DAO token after Curve Finance founder Michael Egorov’s large borrowing position put the lending protocol at risk. Two proposals are currently open for voting until August 10.
Key Points:
– Egorov deposited over 30% of the total market capitalization of the Curve DAO token as collateral to secure loans on Aave v2. However, the recent hack on Curve Finance impacted the token’s price, making Egorov’s position vulnerable to liquidation.
– The first proposal aims to reduce the liquidation threshold by 6% for CRV on Aave v2, potentially subjecting user accounts to liquidation.
– The second proposal seeks to disable borrowing of CRV on Ethereum and Polygon v3, thereby preventing shorting of CRV through the Aave protocol.
– Over 571,000 votes have been cast, with 100% of tokenholders in favor of limiting Aave’s exposure to CRV.
– A third proposal, ending on August 11, suggests that the Aave Treasury buy $2 million worth of CRV tokens from Curve to support the health of the DeFi ecosystem. Currently, 62.91% of voters support the purchase.
The recent hack on Curve Finance exposed vulnerabilities in the DeFi ecosystem, prompting concerns of cascading effects. The attacker returned a portion of the funds, and Curve Finance is offering a bug bounty to identify the thief.
Hot Take:
The Aave community’s proactive approach in reducing its exposure to the Curve DAO token demonstrates its commitment to mitigating risks and securing the health of the DeFi ecosystem. By voting on these proposals, Aave tokenholders are actively shaping the future of the protocol and ensuring its sustainability. It is crucial for the community to stay vigilant and continue to prioritize security measures to protect users and their assets in the evolving landscape of decentralized finance.
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