Aave community will have an on-chain vote on the second phase of the BUSD delisting proposal in Aave V2. According to the governance page, the Aave community plans to initiate an on-chain voting process for the second phase of the BUSD delisting plan in the Aave V2 Ethereum market. The objective is to decrease the availability of BUSD liquidity and incentivize users to transition towards alternative stablecoins.
Aave Community Continues To Remove BUSD From Aave V2
The governance page reveals that the Aave community intends to initiate an on-chain voting process for the second phase of the BUSD delisting plan in the Aave V2 Ethereum market. The primary goal is to decrease the liquidity of BUSD and encourage users to transition to alternative stablecoins.
This plan involves modifying the risk parameters of BUSD and eliminating POL BUSD liquidity. The second phase of the delisting program will focus on creating unfavorable positions for remaining borrowers, incentivizing them to repay their debts adequately or meet the liquidation threshold. The voting period will conclude on June 9.
BUSD experienced a challenging period in March. One significant factor contributing to the prevailing fear was the recent order from the New York regulator to Paxos, restricting BUSD investments and resulting in a substantial decline in the stablecoin’s market value.
Despite this decline, BUSD still maintains its peg to the US dollar, and users’ funds are reasonably secure. However, due to various rumors and suspicions surrounding BUSD, investors are withdrawing their funds from the BUSD market and shifting them to USDT.
The market capitalization of stablecoins, which once exceeded $16 billion, has since dropped to approximately $5 billion. As investor sentiment shifted, the outflow of funds contributed to Tether (USDT) capturing a 52% market share at that time.
It has been reported that Aave implemented the first part of the BUSD delisting plan in March. This involved altering the interest rate strategy of BUSD reserves in the Aave V2 Ethereum pool and increasing the ReserveFactor.
Liquidity was removed, encouraging active users to repay their debts and transfer their positions to other stablecoins. However, this did not provide any incentive for inactive vBUSD debt holders.
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