Aave DAO votes in favor of acquiring CRV tokens with USDT

The DAO will use $2 million worth of USDT to secure 5 million CRV tokens

article-image

WindAwake/Shutterstock modified by Blockworks

share

Led by Marc Zeller of the Aave Chan Initiative, Aave DAO’s community governance process has approved a proposal to strategically acquire CRV tokens using USDT from Aave DAO’s treasury.

This comes in the wake of a recent exploit, when Curve lost over $70 million due to a bug in the programming language Vyper. The aftermath saw CRV, Curve’s native token, plunge to $0.59 at the time of writing; a significant drop from its previous position of approximately $0.73 pre-exploit.

According to Zeller, the proposed acquisition, which involves procuring five million CRV tokens in exchange for two million USDT, would help indicate support for the wider DeFi ecosystem.

He believes it also presents an opportunity to bolster secondary liquidity for Aave’s stablecoin, GHO.

“These tokens can be mobilized to incentivize GHO liquidity via locking them to gather Curve voting power and support a GHO-specific Gauge,” Zeller wrote in a proposal. “The treasury balance and the predicted lower costs for service providers for the 2023-2024 budget would allow this strategic acquisition while maintaining a conservative stance with DAO treasury holdings.”

One concern, voiced by an Aave community member known as MrKris, was that acquiring more CRV tokens would amplify Aave’s exposure to CRV-related risks.

Curve’s founder, Michael Egorov, had taken out a significant loan of an estimated $70 million in USDT using CRV as collateral on Aave v2. This meant that if the price of CRV dropped below 65% to roughly $0.32, Aave could potentially be left with bad debt. Egorov ultimately undertook a process to rebalance and pay down some of that debt.

Despite these concerns, the proposal has passed, with almost 58% of voters choosing to go ahead with the acquisition of CRV, and 42% voting against it.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495B in value locked, doubling Uniswap's Base deployment.

article-image

If we tokenize all assets in a speculative rush, the risk of creating illiquid markets and trapped value will manifest on a large scale

article-image

Plus, Trump is headed to the heart of Bitcoinlandia with a speaking appearance at the Bitcoin 2024 conference

article-image

Meanwhile, stocks rally after Jerome Powell finishes his Capitol Hill tour

article-image

Plus, Blinks have reshaped many people’s understanding of what blockchains are capable of

article-image

Franklin Templeton has the lowest intended ETH fund fee so far, though a similar advantage did not help it win the race for bitcoin ETF assets

article-image

It’s now time for the entire Bitcoin community to recognize that Satoshi’s design transcends the confines of a single chain