AAVE Community Locked BUSD Reserves in AAVE V2 Pool

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The proposal to freeze BUSD reserves in the Ethereum Aave V2 pool was approved by unanimous decision and took effect on February 27.

In the comments to the blocking proposalstablecoins Binance USD (BUSD), posted on the official resource of the DeFi AAVE protocol, states that despite the fact that BUSD is not a borrowed asset and the termination of its issue does not pose a debt risk to market participants, the circulating supply of the asset will ultimately decrease to zero.

“Since the real prospects for growth of BUSDno, and the inability to issue new stablecoins could harm arbitrage opportunities, then the most reasonable path for AAVE is to freeze all BUSD reserves and invite users to switch to another stablecoin present in AAVE,” the conclusion to the AAVE community decision states.

Let us recall that in mid-February the New York State Department of Financial Services (NYDFS) required Paxos Trust to cease
release of new Binance USD. According to reports surrounding the ban, the move was a joint decision by the NYDFS, the Securities and Exchange Commission (SEC) and other US regulators.

Despite Paxos' best efforts to maintain margins andconvert BUSD into cash, this stablecoin continues to lose ground in the market. Due to the lack of ability to issue new coins and continuously burn existing Paxos coins, the current supply of stablecoins is just under 11 billion tokens and has decreased by 30% over the past 30 days.

Monday evening, February 27, market capitalization
BUSD fell from sixth to eleventh place in the CoinGecko rating and is fixed at $10.7 billion. The value of the asset decreased by 0.2% per day. BUSD is trading at $0.9986.