Following the Curve security breach, one of the protocols that seemed vulnerable was Aave[AAVE]. The founder of Curve had a hefty $60 million loan on Aave v2, predominantly backed by CRV. If this loan were liquidated, it could potentially lead to a domino effect, affecting the market and the protocol. However, Aave in the clear following the Curve hack has demonstrated resilience amidst these uncertainties.
Aave’s Position Post-Curve Breach
At present, the CRV collateralized position stands at a debt of 29 million, with a high utilization rate of 2.21. This suggests that a significant portion of available assets is being used or borrowed, nearing full capacity. However, even if liquidation were to occur, the 29 million debt wouldn’t pose a significant risk. Moreover, any potential impact could be effectively managed through the safety module and treasury, offering a comforting layer of control and mitigation.
Key Players in Aave’s Defense
The risk mitigation for Aave and the overall state of DeFi was made possible due to contributions from various large investors. Whales like Justin Sun and DCFGod stepped in to shield both Curve and the Aave protocol. This collective effort ensured the stability of Aave, further solidifying its position in the market.
Aave’s Performance Amidst Challenges
Despite these challenges, Aave’s activity showed a slight decline. Data from the Token terminal indicated a 7.5% drop in the number of daily active users on Aave over the past month. However, Aave’s revenue generation remained steady, growing by 45.3% during the same period, despite the protocol facing setbacks and FUD. Alongside the protocol’s revenue, the price of the AAVE token also saw growth. Over the last week, AAVE’s price increased from $62 to $65.77. This surge in AAVE’s price could be attributed to the increasing number of AAVE token holders.
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