Community members of lending and borrowing platform Aave (AAVE) are submitting a governance proposal in the wake of an unsuccessful attempt to exploit the decentralized finance (DeFi) protocol.
According to the AAVE community, a wallet with the address “0x57e04786e231af3343562c062e0d058f25dace9e” borrowed a massive amount of Curve DAO Token (CRV) on AAVE using $40 million worth of USD Coin (USDC) as collateral, with the end goal being to short CRV.
The proposal, authored by DeFi risk management platform Gauntlet and protocol engineering developer Llama, says,
“Over this past week, the user 0x57e04786e231af3343562c062e0d058f25dace9e opened a short position on CRV using USDC as collateral. At its peak, the user was shorting ~92 million units of CRV (roughly $60 million USD at today’s prices).”
The exploit attempt was foiled, but AAVE sustained bad debt because of slippage.
“The attempt to short CRV on Aave has been unsuccessful, and the user lost ~$10 million USD from the liquidations. The user has been fully liquidated, but despite this, Aave has accrued a much smaller (~$1.6 million USD) bad debt position as of today’s CRV price.”
The proposal calls for the use of Gauntlet’s insolvency refund and the Aave Collector Contract to cover the excess debt, which is isolated to the CRV market.
“While this is a small amount relative to the total debt of Aave, and well within the limits of Aave’s Safety Module, it is best practice to recapitalize the system to make whole the CRV market.”
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The post Aave Community Proposes Governance Changes Following Attempted Crypto Exploit appeared first on The Daily Hodl.
