Tron founder Justin Sun Removes $4.2 Bln from the Lending Protocol Following Yearn & Aave’s Online Dispute
Currently, a proposal to disable borrowing of xSUSHI, DPI, and the LP tokens on the AMM market is being voted on.
The total value locked (TVL) in decentralized finance (DeFi) lending platform Aave has dropped by $4.36 billion to $14.93 billion, according to DeFi Llama.
This big dip in the assets locked in Aave resulted from Tron founder Justin Sun removing more than $4.2 billion worth of crypto from the lending pools of Aave.
The assets removed by Sun included about $1.2 billion USDC, $190 million USDT, $45 million TUSD, 11,000 WBTC, and $490,000 WETH.
This resulted in triggering the interest rates on the platform, with USDC & USDT rates skyrocketing.
Justin removes liquidity
Yearn deposits liquidity
DeFi is stronger together 🙌
— stani.eth (👻,🐻❄️) 👘 🪰🔺 (@StaniKulechov) October 29, 2021
This removal of a significant amount of liquidation from Aave came amidst the tension between members of the Yearn community and Aave. During the bickering on Twitter, one of the Aave community members cautioned against using any project that Yearn Finance (YFI) is involved in, in response to RektHQ’s report on the $130 million hack of Cream Finance describing it as “another failed experiment from the @iearnfinance ecosystem.”
Yearn founder Andre Cronje also tweeted on Friday that Aave is “vulnerable to the same exploit.”
Yearn core contributor Banteg also chimed in with, “Maybe don’t bad mouth other projects while sitting on an 11 figure vulnerability.” He later clarified that the exploit is believed to be for very specific liquidity requirements and has been possible for the past 160 days but is not currently.
But soon, other DeFi community members came out to help mediate the dispute, and both Yearn and Aave also moved to work together and support each other.
Yearn is a network of real people. Passionate, intense, dedicated, sincere, and autonomous contributors who care deeply about our industry, protocols, teams, users, partners, and even competitors. We debate in the open and care for the space as a whole. pic.twitter.com/1YdFYAUvUz
— yearn.finance (@iearnfinance) October 30, 2021
As a precautionary measure, Aave acknowledged that there might be potential vulnerabilities in using xSUSHI as collateral within the Protocol and announced an AIP following the Twitter altercation.
The team noted that multiple simulations showed that any attempt to manipulate xSUSHI would result in losses for the attackers, but still, to mitigate the potential of any future risks, they will disable borrowing of xSUSHI, DPI, and the LP tokens on the AMM market.
Currently, up for voting, the AIP proposes to temporarily disable the borrow function for xSUSHI and DeFi Pulse Index DPI on V2 of the Aave Protocol. It will also freeze deposits, borrows, and rate swaps for UNI/BAL AMM Markets as an extra safeguard.