Aave Token Holders Vote on Proposals to Address Liquidation Risk
Aave token holders have begun voting on two governance proposals designed to mitigate the systemic liquidation risk posed by Curve founder Michael Egorov’s substantial borrowing position on the lending protocol. The proposals, authored by Chaos Labs, aim to disable the borrowing of CRV, Curve’s native governance token, on Ethereum and Polygon V3, as well as reduce the liquidation threshold of CRV. These votes are a direct response to the potential liquidation threat Egorov’s borrowing positions on Aave posed, in which he used 34% of CRV’s market cap to borrow over $63 million. Although Egorov has sold CRV to pay off portions of his debt, the potential for liquidation has motivated Aave token holders to vote on these proposals.
Key Points:
– Aave token holders are voting on two governance proposals to address the liquidation risk posed by Curve founder Michael Egorov’s borrowing position.
– The proposals aim to disable CRV borrowing on Ethereum and Polygon V3 and reduce the liquidation threshold of CRV.
– Egorov used 34% of CRV’s market cap to borrow over $63 million, creating the potential for liquidation.
– The recent Curve exploit caused the price of CRV to plummet, increasing the liquidation pressure on Egorov’s assets.
– Aave token holders are voting on these proposals to prevent further impact on CRV’s price and mitigate the liquidation risk.
Hot Take
The voting by Aave token holders on these governance proposals demonstrates the importance of addressing potential systemic risks in the crypto industry. By disabling CRV borrowing and reducing the liquidation threshold, Aave aims to protect its users and prevent further market disruption. This proactive approach to risk management is crucial for the stability and long-term growth of the crypto market.
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