$120 Million at Risk Due to Critical Flaw Found in Latest AAVE Release

In recent news, it has been reported that a design flaw has been uncovered in the Polygon-based iteration of Aave v2, a prominent DeFi protocol. This revelation came from an analysis conducted by smart contract auditors and on-chain researchers at BlockSec.

Smart Contract Audit Blocksec tweeted about the latest upgrade of Aave V2:

Researchers have raised concerns regarding the recently updated ReserveInterestRateStrategy in Aave v2’s protocol logic. In the latest development, it has been reported that the current iteration of this reasoning is exclusively relevant to Ethereum (ETH), with no bearing on Polygon (MATIC).

A pseudonymous Ethereum (ETH) developer, known as @mookim_eth on Twitter, has provided a comprehensive breakdown of the underlying causes and ramifications of the concerns raised by BlockSec. It has been reported that the lending pool of Aave v2 is incompatible with the updated strategy and cannot be accessed through its current interface, according to a source close to the matter.

Users are currently experiencing a temporary inability to withdraw or exchange a significant amount of cryptocurrency. The affected assets include 5.5 million USDT, 35,000 Wrapped Ethers (WETH), 1,500 Wrapped Bitcoins (WBTC), and 11 million Wrapped Matic (WMATIC), with an estimated value of approximately $120 million.

The protocol’s community has stated that the Aave team has not confirmed the issue through its official communication channels. The statement indicated that the assets are currently unavailable because of an incompatibility between the Ethereum and Polygon implementations of Aave v2.

Also, the protocol guarantees complete safety for all assets, so you needn’t worry about losing anything. USD Coin (USDC), Dai (DAI), and Aave (AAVE) are all functional on Aave v2. According to Aave Governance’s plan, community voting on whether or not to adopt a fix to the Aave v2 codebase would begin at around 4 p.m. UTC on May 20, 2023.