- Aave V2 iteration on Polygon has suffered a temporary halt.
- AAVE’s buying pressure has climbed in the last week.
Aave’s [AAVE] V2 iteration on Layer 2 (L2) network Polygon [MATIC] suffered a temporary halt due to a bug on 19 May. This prevented Aave V2 Polygon users from interacting with Wrapped Ether [wETH], Tether [USDT], Wrapped Bitcoin [WBTC], or Wrapped Matic [WMATIC] pools on the protocol, causing assets worth about $110 million to be stuck.
.@AaveAave the latest upgrade of ReserveInterestRateStrategy in Aave V2 (Polygon) has caused a temporary halt of the protocol, impacting assets worth ~$110M!
The root cause is the new ReserveInterestRateStrategy is only compatible with Ethereum, not compatible with Polygon. https://t.co/kg5696QNPo pic.twitter.com/Ze3zSBS8Ck— BlockSec (@BlockSecTeam) May 19, 2023
Is your portfolio green? Check AAVE Profit Calculator
In a proposal posted on the protocol’s governance page on the same day, this problem was caused by a discrepancy between the V2 version used on Aave v2 Polygon (and Avalanche) and the version deployed on Ethereum [ETH].
Specifically, there is a difference in the interface used by the LendingPool to call the rate strategy of an asset. The interest rate strategies implemented for those assets adhere to the interface of Aave V2 Ethereum but not V2 Polygon. As a result, when the LendingPool tries to retrieve the current rate strategy, this action fails, and any subsequent actions dependent on it, such as deposits or borrowing, also fail.
On 16 May, when an interest rate curve patch was applied to all Aave V2 deployments, the differences in interfaces were not accounted for, culminating in a halt of the Polygon deployment on 19 May.
According to the new proposal, Aave DAO’s approval is being sought for code changes specifically targeted at fixing the issue in the Polygon version. The voting process for this proposal is set to commence on 20 May and will remain open until 23 May.
AAVE has seen growth in the last week
At press time, AAVE traded at $64.98 at press time. According to data from CoinMarketCap, the governance token’s value has rallied by 5% in the last week.
The growth in price has been due to a surge in AAVE’s network activity during this period. According to data from Santiment, the count of daily addresses trading the alt has since grown by 31%.
Read Aave’s [AAVE] Price Prediction 2023-24
Likewise, there has been an uptick in new demand for the token as the count of new addresses created daily to trade AAVE has climbed by 30% in the last week.
Although key momentum indicators rested below their respective center lines, they remained in an uptrend, suggesting that buying momentum was increasing.
Source: AAVE/USDT on TradingView
Source: https://ambcrypto.com/aave-v2-deployment-on-polygon-halts-how-this-affects-you/