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The open-source DeFi protocol Aave (AAVE) has observed that a substantial amount of liquidity has been taken off from the said platform, thus prompting increased interest rates.
The cryptocurrency researcher Igor Igamberdiev may have the answer to this as he revealed in a tweet that Justin Sun – founder of the cryptocurrency platform TRON (TRX) is believed to have withdrawn billions of dollars. Per his tweet, he noted, “Looks like a stable bank run from @AaveAave v2 Mainly thanks to @justinsuntron.”
According to DeFi Pulse’s data, this resulted in Aave’s total value locked (TVL) plunging from $17.89 billion down to $14.7 billion the day before.
The AIP in question
Further, Aave devs have disclosed in a series of tweets that Gauntlet Network – a financial modeling platform – has put forward a so-called Aave Improvement Protocol (AIP) that deactivates the borrowing functionality for both DeFi Pulse Index (DPI) and xSUSHI tokens that serves as a precautionary measure. Moreover, the said AIP also pitched for the deactivation of an Automated Market Maker (AMM), a liquidity provider token on Aave’s AMM Market which is deemed as another layer of protection.
It was also learned that earlier this week, the Aave community has raised their apprehensions about some loopholes with utilizing xSUSHI tokens as a form of collateral for borrowing on Aave. That said, the platform’s developers claim that the folks over at Gauntlet Network conducted some tests where it showed that exploiting those xSUSHI tokens on Aave would not be economically feasible.
Additionally, the Aave team also claimed that despite the results, Gauntlet Network still went on in putting through the AIP. As of writing, the AIP in question is being voted on, though reports suggest that the “yes” vote is the popular choice.
Before what is described by Igamberdiev as a “stable bank run,” Aave was a pretty much notable DeFi protocol if DeFi Llama’s rankings are anything to go by. It is said that the lending platform has piqued the interest of cryptocurrency folks who are seeking to process a stablecoin loan by putting their digital currencies as collateral.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
