Llama and Gauntlet Propose Ideas to Help Aave Pay off $1.6 Million DeFi Debt

A governance proposal has been made on Aave to pay the DeFi lender’s $1.6 million bad debt due to Tuesday’s short attempt connected to Mango Markets exploiter Avraham Eisenberg by the Llama and Gauntlet.

Due to a well-publicized short on Curve DAO (CRV) tokens, Aave accrued bad debt. The CRV price initially dropped as the token fell to a two-year low of $0.4 after one trader borrowed 92 million CRV worth $57 million on the platform and then continued to sell them continuously. The CRV token price surged above $0.60, however, and the short seller felt the squeeze.

The short seller’s debt position on Aave was finally liquidated as a result of the squeeze, leaving the DeFi protocol with a debt of $1.6 million.

According to DeFi management platform Llama‘s most recent financial report, the DeFi lender’s treasury is worth $165 million and may be utilized to pay the extra debt, the proposal said.

The proposal suggests paying off the bad debt using money from the Aave treasury and Gauntlet’s bankruptcy fund. The 4,923 staked Aave tokens in Gauntlet’s bankruptcy fund are held there.

The proposal will be discussed in the upcoming days by the Aave DAO community. If the DAO approves the proposal, Gauntlet and Llama will detail the debt coverage procedure.

According to the suggestion, the debt-covering procedure might aid in improving the Aave DAO treasury. The plan said Aave’s treasury has a sizable quantity of low-value long-tail assets.

The assets, according to Gauntlet and Llama, may be used to recapitalize Aave’s system and, as a result, complete the CRV market.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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