Justin Sun withdraws $ 4.2 billion from Aave, worried about security holes

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2021-10-29 20:55:08

Late on October 29, TRON founder Justin Sun withdrew billions of USD of liquidity from the Aave lending protocol (AAVE) for unknown reasons.

Justin Sun withdraws $ 4.2 billion from Aave, worried about security holes

According to blockchain data, Justin Sun withdrew more than 2.1 billion USD ETH, 1.1 billion USDC, 681 million USD WBTC, 188 million USDT and 45 million USD TUSD, for a total value of 4.2 billion USD, from the Aave lending protocol (AAVE) overnight.

The impact of this “escape” is clearly shown through the key value (TVL) statistics on Aave. From the TVL of 18.48 billion USD on October 28, the project’s TVL as of October 29 is only 15.1 billion USD.

Aave’s TVL statistics as of 08:00 AM on October 30, 2021. Source: DeFi Llama

With liquidity draining so quickly, APR yields on Aave have skyrocketed. Compared to a daily APR of just 6.5%, Aave’s APR at press time has jumped to nearly 25%, attracting many others to move liquidity into Aave.

APR statistics of top lending pools on Aave at 08:00 AM on October 30, 2021

The AAVE token price has not been affected much by the above events, except for the recent pump thanks to its listing on South Korea’s Upbit exchange.

1H chart of AAVE/USDT pair on Binance at 08:00 AM on October 30, 2021

It is still unclear why Justin Sun withdrew such a large amount of money from Aave. However, on the evening of October 29, Aave announced to suspend the lending feature of some pools as a precaution due to concerns about security holes.

The possibility of a vulnerability in Aave is all the more well-founded, stemming from the recent controversy between the development team of Yearn Finance and Aave – the two leading DeFi protocols on Ethereum.

Specifically, after the recent $ 130 million flash loan attack on Cream Finance – a lending platform in the Yearn ecosystem, the developers on the Aave side said that Yearn did not care about users when they left it. Hacks continued to happen with Cream, which had previously been visited by hackers twice in 2021. In response, an important Yearn developer Banteg “half open” that Aave should not be “bold” when they themselves have a vulnerability that can affect the entire amount of money that the project is managing.

The founder of Yearn Finance himself, Andre Cronje, also confirmed that Aave is also at risk of encountering the same security vulnerability as Cream Finance.

“24 hours after the Cream attack, the Aave team is still mocking Yearn, while Aave herself can be exploited by the same vulnerability. Have you informed the user of the amount that would be affected? Are you sure your security is better than ours?”

This is not the only controversy in the Ethereum DeFi community these days. As reported by CHK, developer OlympusDAO recently announced a suspension of work with the project after a conflict with another fork project.

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