Market Analysis Report (30 Nov 2022)

Decentralized finance (DeFi) protocols Aave and Compound have implemented new safety features after an attempted short squeeze left the former with a relatively small amount of bad debt.

Aave has executed a proposal to freeze the markets for 17 different assets in the Aave V2 lending pool on the Ethereum network, including for Yearn.Finance (YFI), Curve DAO (CRV), Gemini Dollar (GUSD), Maker (MKR), and 1inch (1INCH).

Similarly, members of the Compound DAO approved borrow caps for 10 tokens, including the protocol’s versions of Wrapped Bitcoin (WBTC), Uniswap (UNI), Chainlink (LINK), and Aave (AAVE).

The moves come after Avraham Eisenberg, the trader responsible for hacking Mango Markets in October, has borrowed 40 million CRV on Aave in a bid to short the tokens.

Both DeFi protocols account for a significant portion of the total value locked in the DeFi ecosystem, with Aave having $3.7 billion and Compound $1.7 billion in assets locked.