Decentralized finance (DeFi) platform Aave has suspended operations in a number of markets after receiving a problem report regarding a particular feature of the protocol.
DeFi Protocol Discovers Vulnerability; Is user money at risk?
On Saturday, November 4, decentralized lending protocol Aave announced via a post on X (formerly Twitter) that it has paused the Aave V2 Ethereum market and suspended certain assets on Avalanche. Additionally, the protocol has frozen specific assets on Aave V3 on Polygon, Arbitrum and Optimism.
Today we received a report of an issue with a certain feature of the Aave protocol. After validation by community developers, the guardian has taken the following temporary preventive measure (no funds are at risk):
— Aave (@aave) November 4, 2023
According to the protocol announcement, these actions serve as a temporary precaution following a problem report on a specific feature.
Additionally, Aave said in the post that the Aave V3 markets on Ethereum, Base, and Metis and the V2 markets on Polygon and Avalanche remain unaffected. Meanwhile, under the DeFi lending protocol, no funds in any of the markets were at risk.
Since the protocol has been “forked” by several third parties and the exact details have not yet been announced, it is… pic.twitter.com/OkO1EZv6pW
— PeckShield Inc. (@peckshield) November 4, 2023
While Aave did not specify what the problem is or which feature caused the problem, the protocol said it would release a detailed explanation once there is a full fix. The statement read:
An administrative proposal will be submitted soon to restore the normal functioning of the protocols. A detailed autopsy report will be released once the issue is fully resolved.
Aave further clarified that users who supply or borrow from a pool of frozen assets can still withdraw and redeem positions. However, these users will not be able to supply or borrow more money from the frozen asset pool until the issue is resolved. The protocol added:
Paused assets cannot be acted upon until they are resumed.
AAVE price remains stable despite protocol vulnerability
There is no indication that the issue has had any impact on the value of the protocol’s native token, AAVE. At the time of writing, the token is valued at $90.15which reflects a negligible price drop of 0.9% in the last 24 hours.
Nevertheless, the token performs better on a larger time frame. Over the past week, the price of AAVE has risen more than 10%, reaching the $100 mark at some point during the week for the first time since February.
While AAVE’s price has largely moved sideways in recent days, a resolution of the current issue could spark renewed momentum for the token. Therefore, there is a chance that the cryptocurrency will reach $100 again, especially given the bullish climate of the crypto market.
AAVE price slows down upward momentum on the daily timeframe | Source: AAVEUSDT chart on TradingView
Featured image from Binance Academy, chart from TradingView
