MakerDAO Suspends Operations Related to Aave Landing Platform

The DeFi platform MakerDAO community has voted to disable Aave from its direct deposit module. Towards a solutionprompted the Celsius Network to raise a loan of 100 million DAI secured by stETH with the help of a crypto lending project.

The initiative will effectively eliminate the ability for Aave users to borrow DAI using “staking ether” in Lido Finance as collateral.

“The reason we see this as a risk,is that half of the 200M DAI borrowed on Aave is in Celsius and is backed primarily by stETH. […] The risks of infection in DeFi are increasing”, — wrote one of the members of the risk management team at MakerDAO.

Forced liquidation of a Celsius position on Aave could result in additional selling of stETH and jeopardize the return of borrowed DAI.

The decision will be reviewed on July 1.

According to Bloomberg, to reduce relatedstETH risks, Aave suggested that MakerDAO freeze transactions with the token and increase the liquidation threshold from 81% to 90%. In the DeFi platform community, the proposed measures were called “unacceptable risk” and developed their own solution.

On June 13, crypto lending platform Celsius suspended withdrawals, exchanges, and transfers between accounts “due to extreme market conditions.” The project token reacted with a fall of 50%. 

The network also reported that Celsius has hired Citigroup to look for possible financing options, while leading investors have not expressed a desire to save the company.

Recall that Georgetown University law professor Adam Levitin called the bankruptcy of Celsius almost inevitable.

How Celsius, 3AC and stETH problems will affect the price of Ethereum and the cryptocurrency market

Earlier, the expert described a potential scenario for destabilizing the DAI rate for ForkLog.

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