AAVE Crypto under attack “Trading Strategy”
AAVE is a decentralized finance protocol that allows people to lend and borrow crypto. Lenders earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out flash loans using this liquidity.
Token : AAVE
Total Supply : 16,000,000
Circulating Supply : 14,093,192
AAVE attack by CRV lending
AAVE, one of the largest DeFi protocols with a total locked value (TVL) of $4.1 billion, with bad debts of $1.6 million. After getting a warning about a trading strategy that could land Aave in bad debt last month. Avraham Eisenberg had his plan in motion. Eisenberg’s attack on Aave comes after successfully exploiting $116 million from Mango Markets lending protocol in October
Summary
- The trader made his first move on November 13 when he deposited approximately $39 million USDC with a DeFi lender.
- A day later, Eisenberg started borrowing the CRV using his USDC as collateral.
- Eisenberg then exchanged his borrowed CRV for more USDC and turned his already large position through four separate transactions on November 22,
- The price of CRV initially fell due to traders selling tokens in bulk.
- After the release of stablecoin Curve which oddly coincided with a reversal in CRV price after the drop, CRV is up 35% in the last 24 hours
- An increase in the value of the borrowed CRV relative to the pledged USDC, which caused its position to be liquidated but also burdened Aave with $1.6 million in bad debt.
On November 22nd, Avraham Eisenberg, the trader who exploited Mango Markets to the tune of $116 million in October, attempted to replicate a “profitable trading strategy” by borrowing millions of dollars worth of CRV to AAVE to short-sell the token. While Eisenberg’s trade appeared to backfire and result in a multi-million dollar loss as CRV prices quickly recovered after Curve released a whitepaper for the upcoming stablecoin, the attack left the Aave protocol with $1.6 million in bad debt.
Effects of Bad Debt AAVE
Aave, the DeFi lending & borrow money market protocol freezes several low-liquidity asset pools in an effort to protect against attacks like the one experienced at Aave’s CRV pool that caused the protocol to incur $1.6 million worth of debt damage last week.
On November 27 changes were made terminating the following pools: YFI, CRV, ZRX, MANA, 1INCH, BAT, sUSD, ENJ, GUSD, AMPL, RAI, USDP, LUSD, xSUSHI, DPI, renFIL, and MKR Aave v2.
