Aave is a lending protocol. Due to the depreciation of USDC as of yesterday, the protocol has made new decisions. In line with these decisions, the platform announced a stablecoin trading freeze. Moreover, it announced that it has set the Loan-to-Value (LTV) ratio at zero.
Aave Announces Stablecoin Trading Freeze on Avalanche V3
A theory about the trading arrest was put forward in Aave‘s governance forum. Allegedly, this decision was made immediately after a report by the Gauntlet Network recommending a momentarily halt to all v2 and v3 markets.
In order to determine how many insolvencies might arise in various scenarios where the price of USDC stabilizes, recovers, or sharply drops, Gauntlet conducted a risk analysis:
The Collapse of Silicon Valley Bank
Kaiko, known for providing data on digital assets, said centralized crypto exchanges had seen an increase in trading volume in the past hours following the collapse of SVB on Friday. After a bank run prompted by the bank’s most recent financial filings, which revealed it had sold a substantial portion of securities worth $21 billion at a loss of nearly $1.8 billion, SVB was shut down by the California Department of Financial Protection and Innovation on March 11.
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