Aave’s Governance Proposal Changes After $60M Attack
Aave (a protocol for decentralized finance) witnessed an attempt from Avraham Eisenberg (the exploiter of Mango Markets) to exploit it. The exploiter tried to utilize several sophisticated sales on a short scale. In the aftermath of this event, on the 23rd of November 2022, many proposals were made to deal with this. These proposals were put forth by the project contributors of Aave. In this respect, a proposal advocated for halting the 17 v2 pools. The changes mentioned in the respective proposal were executed on the 27th of November.
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Aave Executes the Proposal for Governance Changes
Llama (a protocol engineering designer) and Gauntlet (a financial modeling company) are both installed on Aave. They noted that in the previous week a user (with a wallet linked with Eisenberg) started a short position on Curve by utilizing USDC in the form of collateral. As per them, the consumer was shorting nearly 92M CRV (Curve) units – comprising USD 60M.
Nonetheless, the respective user remained ineffective in shorting CRV as the plan backfired. Consequently, the person lost almost USD 10M in terms of liquidations. Llama asserted that the consumer had been offered liquidity but in return for $1.6M in bad debt, potentially due to slippage. In the words of the company, this excessive debt is separated just to the Curve market.
Platform Assures the Consumers to Be Compliant with Its Safety Module
The firm disclosed that this counts as a little amount in comparison with Aave’s cumulative debt and is completely within the restrictions specified by the Safety Module of Aave. The platform added that the best thing is to recapitalize the system. While further elaborating on this, the proposal of Llama focuses on the insolvency fund of Gauntlet as well as Aave Treasury to turn whole into the bad debt.
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Gauntlet brought to the front the distinctive proposal of momentarily freezing some token markets, taking into account Curve DAO Token, on Aave v2. The focus of Eisenberg was to bring about a liquidity crunch on the platform via shorting huge CRV amounts. Furthermore, this would compel the smart contracts to purchase back the positions.
In this way, a loss would take place in terms of a huge slippage (approximately ninety percent). Nevertheless, the trade turned out to be unsuccessful in liquidation of Eisenberg with very lower slippage scales, contrary to expectations.
