Aave temporarily freezes lending markets to fend off further attacks

The lending markets were frozen right after its governance members passed a vote that aims to temporarily freeze assets considered to be volatile and have low liquidity. The assets included in the list are Yearn Finance (YFI), Curve Finance (CRV), 0x (ZRX), Decentraland (MANA), 1inch (1INCH), Basic Attention Token (BAT), Enjin (ENJ), Ampleforth (AMPL), DeFi Pulse Index (DPI), RENFIL, Maker (MKR) and xSUSHI.

Apart from these, the protocol also suspended the following stablecoins: sUSD, USDP, LUSD, GUSD and RAI. With the assets frozen, users cannot take loans on the assets or deposit their assets to the protocol.

According to the proposal, the aim of the move is to reduce the risk for Aave version 2 and promote the eventual migration to version 3. The proposal also pointed out the lower risk tolerance of community members at the moment. However, the authors of the proposal also highlighted that the next course of action which may be to either delist or relist the markets would depend on liquidity and usage levels.

The governance proposal follows a failed $60-million attack on CRV using USD Coin (USDC) as collateral. The attack was unable to go through because of a wrong calculation of the decentralized protocol’s liquidity levels. Nevertheless, contributors within the project worked on the proposal to prevent further exploit attempts on the protocol.

Despite the turbulence in the broader crypto market, a decentralized finance (DeFi) protocol was able to raise $10 million in investments from various investors like Bitfinex and Ava Labs. Last week, Cosmos-based ecosystem Onomy secured funds to develop its new protocol that combines DeFi and foreign exchange.

Decentralized liquidity protocol Aave has temporarily suspended lending markets for 17 tokens to fend off volatility risks that could lead to further attempts at market manipulation.