Annual Percentage Yields, or APYs, on crypto lending and lending platform Aave have soared to record highs after capital withdrawals sent the decentralized finance protocol, or DeFi, into a liquidity crisis. At the time of writing, the variable APY on the Dai stablecoin loan through Aave has arose at 24.88%, compared to about 6.50% the day before.
According For cryptocurrency researcher Igor Igamberdiev, blockchain personality Justin Sun was responsible for at least billions of dollars in withdrawals in the last few hours. The total locked value of Aave, or TVL, fell to $ 14.7 billion from $ 17.89 billion the previous day, according to data by DeFi Pulse.
In a series of tweets, the developers at Aave revealed that the financial modeling platform Gauntlet Network introduced an Aave Enhancement Protocol, or AIP, to disable the xSUSHI and DeFi Pulse Index (DPI) token lending feature as a precautionary measure. Additionally, the AIP also called for the deactivation of Automated Market Maker, or AMM, liquidity provider tokens on the Aave AMM Market as an additional safeguard.
Earlier in the week, Aave community members raised concerns regarding vulnerabilities in the use of xSUSHI tokens as collateral for borrowing on the platform. Aave Developers alleged that the Gauntlet Network team ran simulations showing that it would not be economically viable to mine xSUSHI tokens on Aave. However, the Aave developers claim that the Gauntlet Network still introduced the AIP despite these results. The AIP is currently in the voting phase, with a large number of "Yes" votes. favored.
Before today's flight, Aave was the most popular DeFi protocol as classified by Defi Llama. The platform has a lot of traction among crypto enthusiasts seeking yield farm or obtain a stablecoin loan by pledging your digital currencies as collateral.
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