• Aave was no longer at risk due to liquidation at the time of writing.
• Contributors such as Justin Sun and DCFGod have protected both Curve and the Aave protocol.
• Despite set backs, activity on Aave continued to decline while revenue generated by Aave remained consistent.
Aave in the Clear Following the Curve Hack
Risk Exposure of Aave Declines
The recent security breach on Curve had far-reaching consequences for both the cryptocurrency sector and the DeFi market. Among protocols susceptible to adverse effects from this breach was Aave[AAVE]. This vulnerability stemmed from a substantial $60 million loan on Aave v2, primarily backed by CRV. If this loan were to face liquidation, increased selling pressure could trigger potential contagion, further impacting the market and the protocol. However, current data revealed that debt stood at 29 million with a high utilization rate of 2.21; any potential impact could be effectively managed through safety modules and treasury controls.
Whales Aid in Protecting Protocols
The mitigation of risk to Aave and DeFi in general was only possible due to contributions from various large investors or ‘whales’ such as Justin Sun and DCFGod which aided in protecting both Curve and the Aave protocol.
Activity Down, Revenue Up
Despite these factors, activity on Aave continued to decline with daily active users falling by 7.5%. However, revenue generated by Aaves remained consistent despite setbacks; growing 45% over last month. Along with this, token prices have also recovered significantly since August 6th when it reached its lowest point since July 1st 2020.
Continued Vigilance Necessary
Given that there are still risks associated with DeFi protocols such as liquidity mining scams and flash loans which can lead to sudden price crashes if not monitored properly; it is important for protocols like those provided by AAVE to remain vigilant against such events in order to prevent future losses or damages for their users/investors.