Aave Community Continues To Completely Remove BUSD From Aave V2
- The Aave community will have an on-chain vote on the second phase of the BUSD delisting proposal in Aave V2.
- The strategy entails changing BUSD risk criteria and eliminating POL BUSD liquidity.
- The voting period will end on June 9.
The governance page shows that the Aave community will launch an on-chain vote on the second part of the implementation of the BUSD delisting plan in the Aave V2 Ethereum market, aiming to reduce the liquidity of BUSD and encourage users to switch to other stablecoins.
The plan involves modifying BUSD risk parameters and removing POL BUSD liquidity. The second part of the delisting program will focus on creating unsustainable positions for remaining borrowers to incentivize them to repay adequately or meet the liquidation threshold. The vote will close on June 9.
BUSD has had a rough March. One of the most important developments contributing to the current wave of fear is the New York regulator’s recent order to Paxos to restrict BUSD investments, resulting in a large reduction in the stablecoin’s market value. This decline has caused investors to worry about the safety of their cash on the Binance platform. Nonetheless, the peg to the US dollar remains in place, and users’ cash is still reasonably safe.
Due to the many rumors and suspicions surrounding this stablecoin, investors are withdrawing their funds from the BUSD market and moving them into USDT. Stablecoins formerly had a market worth of over $16 billion, but it has subsequently dropped to roughly $5 billion. Once investors altered their opinions, the flight of cash helped increase Tether’s (USDT) market share up to 52% at the time.
It is reported that Aave implemented the first part of the BUSD delisting plan in March, that is, changing the interest rate strategy of BUSD reserves in the Aave V2 Ethereum pool and increasing the ReserveFactor (reserve factor), removing liquidity and motivating active users to repay debts and convert their positions Move to other stablecoins, though this provides no incentive for inactive vBUSD debt holders.
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