In response to the potential liquidation risk posed by Curve founder Michael Egorov's substantial borrowing activity within Aave, the lending protocol's token holders have launched governance voting on two critical proposals. These proposals, devised by Chaos Labs, an on-chain risk management platform, have a dual purpose: to disable CRV (Curve's governance token) borrowing on Ethereum and Polygon V3 and to lower the liquidation threshold for CRV.
The impetus for these Aave governance votes emerged from Egorov's sizeable lending positions on the protocol, where he used 34% of CRV's total market cap to borrow more than $63 million. Despite Egorov's efforts to address his debt by selling CRV in OTC deals, lingering liquidation concerns prompted Aave token holders to take action.
One of the proposals aims to curtail the ability to short CRV via the Aave protocol, thus preventing users from borrowing CRV to manipulate its market price. Voting on both proposals will conclude on August 12.
As of now, AAVE is trading at $67.78, whereas CRV's price stands at 61 cents, based on CoinDesk market data.
Chaos Labs CEO Omer Goldberg, the initiator of the governance vote, has not provided comments as of the current time.
Source: au.yahoo.com