MakerDAO Suspends Operations Related to Aave
The community of the DeFi platform MakerDAO has voted to remove Aave from the direct deposit module.
The decision was prompted by the Celsius Network attracting a loan of 100 million DAI secured by stETH using 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.
A member of the risk management team at MakerDAO has said:
“The reason we see this as a risk is because half of the 200M DAI borrowed on Aave is in Celsius and is backed primarily by stETH. Contagion risks are on the rise in DeFi.”
Forced liquidation of a Celsius position on Aave could result in additional selling of stETH and jeopardize the return of borrowed DAI.