A bug in decentralized Finance (DeFi) lending protocol Aave V2 on the Polygon network has made it impossible for users to interact with about $110 million worth of assets on the platform.
Blockchain security firm BlockSec reported on May 19 that the problem was due to the ReserveInterestRateStrategy contract deployed on Polygon. The upgrade was intended to enable a more efficient interest rate curve on Aave V2 and optimize the platform’s utilization.
However, due to its incompatibility with the network, Aave users cannot interact with their assets on the protocol. This means users can’t borrow, withdraw, repay, or supply more of these assets to the protocol as every call reverts.
Funds Remain Safe
Developers have acknowledged the problem noting that only Aave V2 on Polygon was affected. The V2 on Ethereum and Avalanche are working perfectly, and so is the V3 protocol.
The developers also assured users that their funds, including the affected assets, were safe.
While the problem is not a safety issue, users cannot fully interact with the assets until the problem is fixed. The only way this can be achieved is through governance.
Aave is Working on Solution
A new governance proposal has been submitted to fix the issue — the Aave DAO will start voting on the proposal later today.
“Considering governance times, if approved, the fix will be applied in approximately 7 days from now: 1 day of delay to start voting, 3 days of voting, 1 day of timelock on Ethereum, and 2 extra days of timelock on Polygon,” part of the proposal reads.
This incident further highlights how complex DeFi can be, with different Ethereum Virtual Machine-compatible (EVM) chains having their peculiarities.
Aave is among the most prominent DeFi protocols due to its many users. The total value of assets locked (TVL) on the crypto lending protocol sits at $5.18 billion, according to Defillama. Aave V2 accounts for most of this TVL with $3.72 billion.
Meanwhile, the news has had minimal impact on AAVE’s price performance. The token is up 0.1% in the last 24 hours, trading for $64.85 as of press time, according to BeInCrypto data.
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.
Comments are closed.