Aave proposal to freeze alleged Curve founder’s loans draws controversy

According to the proposals author, monetary modeling platform Gauntlet, the Ethereum address 0x7a16ff8270133f063aab6c9977183d9e72835428 has actually built up $67.7 million worth of debt in US Dollar Coin (USDC) and Tether (USDT) through the AAVE V2 protocol utilizing $185 million of Curve tokens as security. Gauntlet expressed fears that this account may continue increasing its debt, leading to the threat that it may be liquidated if there is an unexpected fall in the cost of Curve. Intensifying the issue in Gauntlets view is the truth that CRV has suffered a decrease in liquidity over the past few months. This may cause slippage if the account gets liquidated, as there might not be adequate buyers of CRV in the market ready to handle such a big quantity of tokens. This might result in millions of dollars in bad financial obligation for AAVE, Gauntlet suggested.AAVE user DecentMuse claimed that the wallet address “is tagged as coming from the founder of Curve,” showing that it might belong to Egorov. In DecentMuses view, the loan may represent a method for the founder to take benefit from his entrepreneurial activities on behalf of Curve. Cointelegraph was not able to validate the identity of the addresss owner.In the proposal, Gauntlet recommended that the AAVE decentralized autonomous organization (AAVE DAO) ought to carry out a patch to freeze any further uses of CRV as collateral for loans. This would permit the account to continue holding its existing loan position, but would likewise prevent it from building up any additional debt.Related: Bug in Aave v2 on Polygon causes some properties to end up being stuck in contractsSome online forum participants supported the proposition and criticized the account for stacking on a lot debt. For example, a user who passes the handle “AAVEBull” apparently declared that the account must have no intent of settling its debts, considering that it has actually constantly contributed to its position as the token has declined in price.In reaction, critics of the proposal safeguarded the account. User pray.eth mentioned that the accounts owner might simply think CRV tokens are drastically undervalued; leading them to believe that as the cost decreases, it makes sense to increase their usage as collateral.An Aave online forum individual commenting on the matter Source: AaveAave-Chan Initiative (ACI) creator Marc Zeller, who is a frequent individual in the online forums, likewise weighed in on the proposal. He specified that AAVE DAO should be careful not to break “the core principles of DeFi, which is neutrality.” “The intent of users or what they make with their funds is not our primary issue,” Zeller specified, including “Users need to be complimentary to use the procedure as they please.” The proposition is listed as a “suggestion” as of June 16. This means that it has not yet been developed into an official AAVE Improvement Proposal (AIP) that can be voted on by the DAO. The author has actually stated that turning it into a formal AIP is the proposals “next action.” Participants in the blockchain environment continue to dispute the limits of censorship-resistance. In January, many Bitcoin users grumbled of high costs caused by other users minting and trading Ordinals. Some users desired to ban ordinals, while others saw a ban as censorship.On April 11, Tether blacklisted an address that had drained $25 million from EVM front-running bots. Polygon co-founder Jaynti Kanani said the blacklisting established “a bad precedent” that might lead to more transactions being censored, while on-chain sleuth ZachXBT claimed that Tether may have been required to take part in the act due to a court order. Publication: Hyperbitcoinization is underway, RFK seeks Bitcoin contributions and other news

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A June 12 AAVE (AAVE) proposition intended at avoiding a particular account from building up more financial obligation has led to debate, with some individuals arguing that the proposition violates the principle of censorship-resistance or “neutrality” in decentralized finance, or DeFi.Some participants believe that the account is owned by Curve (CRV) founder Michael Egorov. Cointelegraph was not able to separately verify who the accounts owner is.Uhh appears like Curves creator has a $110m leverage position against his $CRV stack across all Defi.If not paid back eventually (spoil: it prob wont, my man is taking profit), this will cascade into a great deal of uncollectable bill for providing procedures https://t.co/kxwc0Sk65V pic.twitter.com/yhHp9JFWBV— vapor (@trading_vapor) June 14, 2023

Gauntlet revealed worries that this account may continue increasing its debt, leading to the danger that it might be liquidated if there is an unexpected fall in the cost of Curve. Cointelegraph was not able to verify the identity of the addresss owner.In the proposal, Gauntlet recommended that the AAVE decentralized self-governing organization (AAVE DAO) must implement a spot to freeze any additional usages of CRV as collateral for loans. This would enable the account to continue holding its existing loan position, but would likewise avoid it from collecting any further debt.Related: Bug in Aave v2 on Polygon triggers some properties to end up being stuck in contractsSome online forum individuals supported the proposition and criticized the account for piling on so much debt. A user who goes by the manage “AAVEBull” apparently claimed that the account needs to have no intent of paying off its debts, given that it has actually constantly added to its position as the token has actually declined in price.In action, critics of the proposal protected the account.