Aave Users Face Withdrawal Issues Due to Lending Pool Shortfall; Debate Over Compensation Rages On
Summary:
Users of Ampleforth's AMPL stablecoin are unable to withdraw their assets from the Aave platform due to a deficit in the lending pool. The issue, which has existed since December 2023, was resonated by Bored Ghost Developing Labs identifying a contract bug, which drained funds making withdrawals impossible. Ampleforth recommended Aave purchase and distribute AMPL tokens as compensation; however, Aave proposed issuing stablecoins instead and asked Ampleforth to contribute 40% towards compensation. A proposal to dispense $300,000 USD Coin (USDC) as a start was favored by voters on April 5.
Users of Ampleforth’s AMPL stablecoin are voicing concern over an inability to access their assets on the renowned decentralized finance (DeFi) platform, Aave. The issue is linked to a deficit in the lending pool and has left AMPL holders unable to withdraw their deposited assets on Aave since December 2023. Other Aave DeFi pools are not experiencing the same issues. AMPL utilizes a unique feature where its number of tokens is adjusted based on its price to match the U.S. dollar’s 2019 value inclusive of inflation. Aave reportedly experienced an alleged market manipulation attack on its Curve (CRV) pool in November 2022, which did not result in profit for the attackers but did produce $1.6 million in bad debt for Aave. To counter this, on November 2, 2022, AaveDAO declared a freeze on deposits and loans for 17 selected tokens, including AMPL. This did allow existing users to withdraw, but impeded new deposits and loans. A subsequent announcement in December 2023 by Bored Ghost Developing Labs, a developer team for the Aave Protocol, reported an additional complication obstructing withdrawals. Evidently, a bug in the pool contract had sapped funds, leaving insufficient liquidity for the processing of withdrawals. A solution proposed by an Ampleforth representative to buy and distribute AMPL tokens as a form of user compensation was countered by Aave developers with an alternative solution to pay out in stablecoin instead of AMPL. Moreover, Aave developers have requested that 40% of the compensation package be provided by the Ampleforth team themselves. Whilst the Ampleforth team has yet to confirm if they will honour this, they have pledged continued support to rectifying the issue. Bored Ghost Developing Labs put forward a proposal on March 31 to repay depositors with $300,000 USD Coin (USDC), with the idea that the remaining sum could be issued following further discussions. Despite disagreement on a resolution, the vote was overwhelmingly passed on April 5, with 99.9% of votes in favour.
Published At
4/10/2024 1:00:00 PM
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