Aave Should Block Curve Token Borrowing, Risk Management Firm Proposes

Security firms are floating proposals to forestall aboriginal loans against $158 cardinal worthy of curve (CRV) tokens connected Aave, a lending and borrowing platform, amid an ongoing concern that has enactment the full DeFi ecosystem nether accent since Sunday.

Gauntlet, which specializes successful hazard management, posted the proposal connected Wednesday to the Aave assemblage members, who person until August 5 to ballot connected the proposal.

“Gauntlet has been looking into the hazard illustration of 0x7a16ff8270133f063aab6c9977183d9e72835428. This relationship borrows astir $54m of USDT against $158m of CRV, arsenic of 2023/08/01,” the connection read. “We urge mounting CRV LTV to 0 to assistance impede further borrowing against existing CRV collateral owed to the caller alteration successful CRV liquidity.”

The loan-to-value (LTV) ratio is simply a measurement comparing the magnitude of immoderate collateral plus to the loan’s size. The higher the down payment; the little the LTV ratio – and a zero LTV efficaciously means loans cannot beryllium taken.

Curve Finance, a stablecoin swapping giant, suffered a Sunday exploit that drove down the terms of the CRV token, putting a $168 cardinal stash of laminitis Michael Egorov's wealth astatine hazard of being liquidated.

This created bearish sentiment for the tokens among traders alongside concerns that liquidated assets would person to beryllium sold into a marketplace wherever prices are already falling. The liquidation of specified a ample presumption could person enactment unit connected different DeFi protocols due to the fact that CRV is utilized arsenic a trading brace and ballast successful trading pools crossed the ecosystem.

However, affluent DeFi players specified arsenic Justin Sun person stepped up to acquisition discounted crv from Egarov successful an effort to enactment up liquidity, as reported.