Aave’s governance community has passed a proposal to freeze lending markets for 17 Ethereum-based tokens on Aave’s v2 protocol.

The governance community of Aave, a leading Ethereum decentralised lending protocol, has voted to temporarily close support of 17 Ethereum-based tokens and stablecoins markets on the Aave v2 protocol due to volatility and other risk concerns.

Aave Community Passes Proposal to Suspend 17 Tokens Amid Volatility Issues

The affected token markets are as follows: yearn.finance (YFI), Curve DAO (CRV), 0x (ZRX), Decentraland (MANA), 1inch (1INCH), Basic Attention Token (BAT), Ampleforth (AMPL), DeFi Pulse Index (DPI), renFIL (RENFIL) and Maker (MKR), Enjin (ENJ), xSUSHI (xSUSHI). The stablecoin markets include sUSD, GUSD, RAI, USDP, and LUSD.

Llama and Chaos Labs reportedly made the proposal on the ground that the “market situation of these assets is currently volatile.”

A summary of the proposal further noted that Aave’s v2 protocol lacks certain risk controls that Aave v3 solves for “supply caps, borrow caps, isolation mode, e-mode, etc.” However, the proposed parameter updates will derisk Aave v2 and promote eventual migration to v3.

Per the post, some of the affected tokens may be completely delisted or relisted in the future, depending on liquidity and usage levels.

“We are pleased to see the community taking the important first step to further manage risk following today’s events on the protocol, especially with rigour. This is a strong first step for the DAO as it works towards a community-led solution,” said Aave Companies, the for-profit company behind the Aave DeFi lending protocol.

DeFi Communities Are Taking Precautionary Steps Amid FTX’s Fallout

Over the recent weeks, DeFi governance communities have been taking measures to hedge against any possible impact from the ongoing liquidity crisis and market volatility spurred by the demise of crypto companies, especially FTX.

Last week, the Maker’s governance community also passed a proposal to offload renBTC from Dai stablecoin reserve. The community foresees a potential depeg in the bitcoin token due to its apparent financial ties with the bankrupt Alameda Research, which acquired the project in early 2021.

（By Ibiam Wayas）