{"id":12609,"date":"2022-11-23T20:02:01","date_gmt":"2022-11-24T00:02:01","guid":{"rendered":"http:\/\/cryptocornercafe.com\/cafe\/?p=12609"},"modified":"2022-11-23T20:02:01","modified_gmt":"2022-11-24T00:02:01","slug":"aave-price-recovers-back-to-57-but-threat-of-new-attack-looms-over-protocol","status":"publish","type":"post","link":"http:\/\/cryptocornercafe.com\/cafe\/2022\/11\/23\/aave-price-recovers-back-to-57-but-threat-of-new-attack-looms-over-protocol\/","title":{"rendered":"Aave Price Recovers Back To $57, But Threat Of New Attack Looms Over Protocol"},"content":{"rendered":"

The Ethereum-based decentralized finance (DeFi) protocol Aave suffered an attack led by Avraham Eisenberg. The controversial individual was behind a sophisticated run against Mango Markets. The run has been called an attack by some and a clever strategy by others.\u00a0<\/strong><\/p>\n

Aave (AAVE) trades at $57 with a 7% and 36% loss in the last 24 hours and the previous week, respectively. Curve Finance\u2019s native token CRV was also part of the attack. This token has seen significant selling pressure in the short term but has been trending to the upside over today\u2019s trading session.\u00a0<\/p>\n

AAVE\u2019s price moving sideways after a downside trend on the daily chart. Source: AAVEUSDT Tradingview<\/strong><\/a><\/p>\n

Orchestrating An Attack On Aave, First Attempt?<\/strong><\/h2>\n

Rudy Kadoch, founder of the portfolio management project Nested, summarized<\/a> yesterday\u2019s event and the \u201cBad Debt\u201d attack on Aave. According to this report, Eisenberg borrowed $83 million of CRV and used $50 million of stablecoin USDC as collateral on the decentralized finance platform.\u00a0<\/p>\n

Eisenberg published the thesis that supported this strategy in October 2022 via his Twitter account. It was public, and his objectives were perfectly outlined: to leverage his initial capital to influence the price of an illiquid token, such as CRV or Ravencoin (RVN), in hopes of creating \u201cbad debt,\u201d an excess liability assumed by the protocol.\u00a0<\/p>\n

Check out recent activity in the @CurveFinance<\/a> $CRV<\/a> pools on @AaveAave<\/a> V2!<\/p>\n

Over the past couple of days, the $CRV<\/a> pools on Aave have seen a significant increase in both borrow rate and volume, likely to go short on $CRV<\/a>. pic.twitter.com\/Hx5Bt42Ks6<\/a><\/p>\n

\u2014 Messari (@MessariCrypto) November 22, 2022<\/a>\u00a0<\/p>\n

To pay off this debt, Aave would trigger an auction mechanism that involves selling AAVE on the spot market. By taking a short position on this token, Eisenberg would benefit.\u00a0<\/p>\n

I\u2019ve been advised aave is perfectly safe so here\u2019s the potential trading strategy. Not financial or legal advice, but if you do make 9 figures on this feel free to send a tip<\/p>\n

Note that starting with more initial capital increases success odds and profit percentage pic.twitter.com\/HKAF7Y5ogM<\/a><\/p>\n

\u2014 Avraham Eisenberg (@avi_eisen) October 19, 2022<\/a>\u00a0<\/p>\n

By prompting the price of the underlying collateral, the Aave borrower can double or increase its price by five-fold \u201cat least.\u201d This attack was unsuccessful, as Kadoch noted, due to a lack of capital. The actor was trying to liquidate a CRV whale to create a bad debt.\u00a0<\/p>\n

However, as the attack was being carried out, the team behind Curve Finance released the whitepaper for a stablecoin, crvUSD. This announcement supported the price of the token and shifted the trend. Kadoch noted:\u00a0<\/p>\n

\u2013 $sdCRV, $cvxCRV, $yCRV depegged a lot with more than a 10% discount to get back $CRV.<\/p>\n

\u2013 People are paying more than 200% to borrow $CRV.<\/p>\n

\u2013 People telling Aave is not secure while the system was ready for such an event.<\/p>\n

The Future Of Aave In Jeopardy?<\/p>\n

On the other hand, the protocol operated as intended without centralized intervention. The team behind Aave claims that they will talk with the community and the DAO about the recent incident.\u00a0<\/p>\n

In that sense, the protocol might introduce changes in the coming days to mitigate \u201clong tail asset risk.\u201d Many believe Eisenberg will resume its attack on the protocol once he can pool together more capital.\u00a0<\/p>\n

You can call it attack on AAVE, but I actually think they made a mistake by not implementing a hard cap on how much CRV\/other illiquid coins can you use as a collateral on AAVE. Otherwise you get a similar problem as with FTT.<\/p>\n

\u2014 DeFiac (@TheDEFIac) November 23, 2022<\/a>\u00a0<\/p>\n

The \u201cBad Debt\u201d attack on Aave was like the situation that led to the FTX\u2019s collapse. The failed company issued held massive amounts of FTT, its native token. When the price of the asset crashed, Sam Bankman-Fried\u2019s empire followed.\u00a0<\/p>\n

Unlike FTX, as many users pointed out, everyone can access on-chain information about Eisenberg\u2019s transactions, the state of the protocol\u2019s finance, and the amount of bad debt it held on its balance sheet. This transparency is the critical difference between centralized ecosystems and decentralized protocols.\u00a0The team behind Aave stated<\/a>:<\/p>\n

Most importantly, today\u2019s events are in contrast to those we have seen with centralized entities in the space \u2013 the transactions were entirely traceable and auditable on-chain, providing transparency for users and the community.<\/p>","protected":false},"excerpt":{"rendered":"

<\/p>\n

The Ethereum-based decentralized finance (DeFi) protocol Aave suffered an attack led by Avraham Eisenberg. The controversial individual was behind a sophisticated run against Mango Markets. The run has been called an attack by some and a clever strategy by others.\u00a0<\/strong><\/p>\n

Aave (AAVE) trades at $57 with a 7% and 36% loss in the last 24 hours and the previous week, respectively. Curve Finance\u2019s native token CRV was also part of the attack. This token has seen significant selling pressure in the short term but has been trending to the upside over today\u2019s trading session.\u00a0<\/p>\n

AAVE\u2019s price moving sideways after a downside trend on the daily chart. Source: AAVEUSDT Tradingview<\/strong><\/a><\/p>\n

Orchestrating An Attack On Aave, First Attempt?<\/strong><\/h2>\n

Rudy Kadoch, founder of the portfolio management project Nested, summarized<\/a> yesterday\u2019s event and the \u201cBad Debt\u201d attack on Aave. According to this report, Eisenberg borrowed $83 million of CRV and used $50 million of stablecoin USDC as collateral on the decentralized finance platform.\u00a0<\/p>\n

Eisenberg published the thesis that supported this strategy in October 2022 via his Twitter account. It was public, and his objectives were perfectly outlined: to leverage his initial capital to influence the price of an illiquid token, such as CRV or Ravencoin (RVN), in hopes of creating \u201cbad debt,\u201d an excess liability assumed by the protocol.\u00a0<\/p>\n

Check out recent activity in the @CurveFinance<\/a> $CRV<\/a> pools on @AaveAave<\/a> V2!<\/p>\n

Over the past couple of days, the $CRV<\/a> pools on Aave have seen a significant increase in both borrow rate and volume, likely to go short on $CRV<\/a>. pic.twitter.com\/Hx5Bt42Ks6<\/a><\/p>\n

\u2014 Messari (@MessariCrypto) November 22, 2022<\/a>\u00a0<\/p>\n

To pay off this debt, Aave would trigger an auction mechanism that involves selling AAVE on the spot market. By taking a short position on this token, Eisenberg would benefit.\u00a0<\/p>\n

I\u2019ve been advised aave is perfectly safe so here\u2019s the potential trading strategy. Not financial or legal advice, but if you do make 9 figures on this feel free to send a tip<\/p>\n

Note that starting with more initial capital increases success odds and profit percentage pic.twitter.com\/HKAF7Y5ogM<\/a><\/p>\n

\u2014 Avraham Eisenberg (@avi_eisen) October 19, 2022<\/a>\u00a0<\/p>\n

By prompting the price of the underlying collateral, the Aave borrower can double or increase its price by five-fold \u201cat least.\u201d This attack was unsuccessful, as Kadoch noted, due to a lack of capital. The actor was trying to liquidate a CRV whale to create a bad debt.\u00a0<\/p>\n

However, as the attack was being carried out, the team behind Curve Finance released the whitepaper for a stablecoin, crvUSD. This announcement supported the price of the token and shifted the trend. Kadoch noted:\u00a0<\/p>\n

\u2013 $sdCRV, $cvxCRV, $yCRV depegged a lot with more than a 10% discount to get back $CRV.<\/p>\n

\u2013 People are paying more than 200% to borrow $CRV.<\/p>\n

\u2013 People telling Aave is not secure while the system was ready for such an event.<\/p>\n

The Future Of Aave In Jeopardy?<\/p>\n

On the other hand, the protocol operated as intended without centralized intervention. The team behind Aave claims that they will talk with the community and the DAO about the recent incident.\u00a0<\/p>\n

In that sense, the protocol might introduce changes in the coming days to mitigate \u201clong tail asset risk.\u201d Many believe Eisenberg will resume its attack on the protocol once he can pool together more capital.\u00a0<\/p>\n

You can call it attack on AAVE, but I actually think they made a mistake by not implementing a hard cap on how much CRV\/other illiquid coins can you use as a collateral on AAVE. Otherwise you get a similar problem as with FTT.<\/p>\n

\u2014 DeFiac (@TheDEFIac) November 23, 2022<\/a>\u00a0<\/p>\n

The \u201cBad Debt\u201d attack on Aave was like the situation that led to the FTX\u2019s collapse. The failed company issued held massive amounts of FTT, its native token. When the price of the asset crashed, Sam Bankman-Fried\u2019s empire followed.\u00a0<\/p>\n

Unlike FTX, as many users pointed out, everyone can access on-chain information about Eisenberg\u2019s transactions, the state of the protocol\u2019s finance, and the amount of bad debt it held on its balance sheet. This transparency is the critical difference between centralized ecosystems and decentralized protocols.\u00a0The team behind Aave stated<\/a>:<\/p>\n

Most importantly, today\u2019s events are in contrast to those we have seen with centralized entities in the space \u2013 the transactions were entirely traceable and auditable on-chain, providing transparency for users and the community.<\/p>\n

<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_layout":"default_layout","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[82],"tags":[],"class_list":["post-12609","post","type-post","status-publish","format-standard","hentry","category-blockchain"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/posts\/12609","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/comments?post=12609"}],"version-history":[{"count":0,"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/posts\/12609\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/media?parent=12609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/categories?post=12609"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/tags?post=12609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}