The Aave community has voted on-chain with a 100% approval rate to pass the proposal “Banning Additional CRV Collateral Borrowing.” The proposal was put forward by DeFi risk manager Gauntlet, stating that “due to the recent decrease in CRV liquidity, it is recommended to set the CRV LTV on Aave V2 on Ethereum to 0, in order to prevent further borrowing against existing CRV collateral.”
Earlier, the founder of Curve used approximately $158 million worth of CRV as collateral to borrow around $54 million USDT. However, as Curve came under attack and faced liquidity issues due to CRV being used as collateral in multiple protocols by the founder, a series of DeFi protocols now face the risk of liquidation cascades.