Aave DAO Begins Voting on Proposal to Reduce CRV Risk

Author: ANA PAULA PEREIRA, COINTELEGRAPH; Compiler: Songxue, Jinse Finance

**The Aave community is looking to reduce its protocol exposure to the Curve DAO token and opened voting on two proposals on August 10th. The move was made to limit the risk to the lending agreement from the large borrowing position held by Curve Finance founder Michael Egorov. **

Curve DAO (CRV) is the native token of the decentralized finance (DeFi) protocol Curve Finance. Egorov secured nearly $60 million in loans on Aave v2 with more than 30% of CRV's total market capitalization as collateral. However, Curve’s hack on July 30 affected its token price, making Egorov’s position vulnerable to liquidation.

Aave token holders have until August 12 to vote on two proposals. **There is an attempt to lower the liquidation threshold for CRV on Aave v2 by 6%, which could result in user accounts being liquidated upon approval. The second proposal is to prohibit the borrowing of CRV on Ethereum and Polygon v3, thereby disabling the ability to short CRV through the Aave protocol. **

A proposal to lower the CRV liquidation threshold on Ethereum Aave v2. Source: Aave

As of this writing, over 571,000 votes have been cast, with 100% of holders in favor of limiting Aave's investment in CRV.

Fearing that Egorov's loan would be liquidated, the Aave community is also voting on a third proposal that will close on August 11. In the proposal, Aave Chan founder Marc Zeller called on the Aave Treasury to purchase $2 million worth of CRV tokens from Curve, claiming that this would show that DeFi players support the health of the ecosystem. As of this writing, 62.91% of voters support the purchase and 37.09% oppose it.

**Curve’s attack raised concerns about a ripple effect across the DeFi ecosystem. ** This hack was due to a vulnerability in three versions of Vyper, the universal programming language across DeFi protocols. The breach sparked an on-chain battle between white hat and black hat hackers over attempted attacks and the recovery of funds, some of which have been returned to the attackers. Curve Finance Offers Bug Bounty to Anyone Who Can Identify Thief