Decentralized finance (DeFi) platform Aave has halted operations in a number of marketplaces after receiving an issue report on a specific protocol function.
The Defi Protocol Has Discovered A Vulnerability; Are User Funds At Risk?
Aave, a decentralized lending protocol, said on Saturday, November 4, via a post on X (previously Twitter), that it has paused the Aave V2 Ethereum market and suspended certain assets on Avalanche. Furthermore, the protocol has frozen specific assets on Aave V3 on Polygon, Arbitrum, and Optimism.
Today we received a report of an issue on a certain feature of the Aave Protocol. After validation by community developers, the guardian has taken the following temporary prevention measure (no funds are at risk):
— Aave (@aave) November 4, 2023
According to the protocol’s release, these steps are taken as a preventative measure in the aftermath of a problem report on a specific feature.
Aave also stated in the statement that the Aave V3 markets on Ethereum, Base, and Metis, as well as the V2 markets on Polygon and Avalanche, are not affected. Meanwhile, according to the DeFi lending policy, no funds in any of the markets were at risk.
🚨🚨 🚨 On 11-04 17:38:35 UTC, Aave Guardian has taken necessary protection measurements to pause AaveV2 protocol (and all Aave pools are safe): https://t.co/3xJzfiejig
Given the protocol is “forked” by multiple third parties and the exact details are not disclosed yet, it is… pic.twitter.com/OkO1EZv6pW
— PeckShield Inc. (@peckshield) November 4, 2023
While Aave did not explain the issue or the functionality that caused it, the protocol stated that it would offer a complete explanation once the issue has been resolved. According to the statement:
“A governance proposal to restore the normal operation of the protocols will be submitted shortly. A detailed postmortem will be released once the issue is fully resolved.”
Aave went on to say that customers who provide or borrow from a frozen assets pool can still withdraw and reimburse holdings. However, until the issue is rectified, these users will be unable to supply or borrow cash from the frozen assets pool. The protocol also stated:
“On paused assets, no action can be done until unpaused.”
Despite Protocol Vulnerability, AAVE Price Remains Stable
There is no evidence that the issue has affected the value of the protocol’s native token, AAVE. As of this writing, the token is worth $94.15, representing a 0.9% price drop in the last 24 hours.
Nonetheless, the token outperforms over a longer timescale. AAVE’s price has risen by more than 10% in the last week, reaching $100 for the first time since February at some point during the week.
Although the price of AAVE has been basically horizontal in recent days, a resolution to the current situation could spark renewed interest in the token. As a result, given the current state of the crypto market, there is a potential that the coin may return to $100.
Disclaimer: The information provided is not trading advice. Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.