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Aave Considers Exiting Polygon PoS Chain Over Stablecoin Reserve Proposal
Decentralized lending platform Aave is considering a drastic measure in response to a recent proposal related to stablecoins on the Polygon Proof of Stake (PoS) network. Aave Chan, a contributing group to the decentralized lending platform, has presented a proposal aimed at reducing risks in its services on the Polygon PoS network.
The proposed measures include setting a loan-to-value ratio of 0% and increasing the reserve factor to 85%, which would discourage new deposits and protect user funds. Furthermore, Aave Chan suggests migrating governance infrastructure to a more secure L2 network, freezing certain reserves on Polygon, and gradually reducing loan limits for bridged assets to minimize potential failure points.
However, it appears that these measures may not be sufficient to guarantee the security of its users’ assets. The proposal has sparked concerns about the potential risks associated with bridging stablecoins, such as increased vulnerabilities to hacks or exposure to uncollectible debts.
As a result, Aave is considering exiting the Polygon PoS chain entirely due to concerns over the security and sustainability of these bridged assets. This decision could have far-reaching implications for the decentralized finance (DeFi) ecosystem as a whole, given the significant amount of inactive stablecoins currently on the network ($1.3 billion).
The DeFi community is closely watching this development, particularly in light of recent concerns about security in the space.
Source: crypto-economy.com
