{"id":46546,"date":"2023-03-12T16:36:36","date_gmt":"2023-03-12T20:36:36","guid":{"rendered":"https:\/\/coinscreed.com\/staging\/?p=46546"},"modified":"2023-03-12T16:53:49","modified_gmt":"2023-03-12T20:53:49","slug":"aave-suspends-stablecoin-trading-on-v3-avalanche","status":"publish","type":"post","link":"https:\/\/coinscreed.com\/staging\/aave-suspends-stablecoin-trading-on-v3-avalanche\/","title":{"rendered":"Aave suspends stablecoin trading on v3 Avalanche"},"content":{"rendered":"\n

In response to recent stablecoin price volatility<\/a>, Aave has stopped trading stablecoins and set the loan-to-value (LTV) ratio to 0.<\/p>\n\n\n\n

\"Aave
Aave suspends stablecoin trading on v3 Avalanche<\/figcaption><\/figure>\n\n\n\n

The trading halt, according to Aave's governance forum, follows a report from decentralized financial risk management firm Gauntlet Network <\/a>that suggests all v2 and v3 markets should be momentarily halted. One forum user made the following observation:<\/p>\n\n\n\n

\n

\u201cSetting LTV to 0 definitely helps everywhere, but on the Avalanche v3 Pool, given that cross-chain infrastructure doesn\u2019t cover Avalanche, the Aave Guardian can act immediately. Setting LTV to 0 in practise discounts the ‘borrowing power' of the asset, without affecting the HF of any user position,\u201d <\/p>\n<\/blockquote>\n\n\n\n

LTV is a crucial number for figuring out how much credit you can get using cryptocurrency as security. The ratio is determined as a percentage by dividing the credit amount borrowed by the value of the security.<\/p>\n\n\n\n

Gauntlet's risk study looked at the amount of insolvencies that could happen in several scenarios, taking into account whether the price of USDC stabilizes, recovers, or dramatically declines:<\/p>\n\n\n\n

\n

\u201cV3 emode assumes correlation of stablecoin assets, but at this time, those correlations have diverged. The risk has increased given that the liquidation bonus is only 1% for USDC on emode. To account for these assumptions that no longer remain true, we recommend pausing the markets. […] At current prices, insolvencies are ~550k. These can change depending on the price trajectory and further depegs.”<\/p>\n<\/blockquote>\n\n\n\n

\"\"<\/figure>\n\n\n\n

According to digital assets analytics provider Kaiko, centralized crypto exchanges have observed a spike in trade volume in the hours following the failure of Silicon Valley Bank (SVB) on March 10.<\/p>\n\n\n\n

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Two big $USDC\r\n \r\n \r\n \r\n <\/g>\r\n \r\n \r\n \r\n <\/clipPath>\r\n <\/defs><\/svg><\/span><\/a> markets on exchanges seeing heavy sell pressure and huge volumes in last 24 hours

Despite plenty of reassurance on crypto twitter, most investors still selling USDC at a big discount pic.twitter.com\/W9uy2HHax4<\/use><\/svg><\/span><\/a><\/p>— Conor Ryder (@ConorRyder) March 11, 2023<\/use><\/svg><\/span><\/a><\/blockquote>

After a bank run prompted by the bank's most recent financial filings, which revealed it had sold a substantial portion of securities worth $21 billion at a loss of nearly $1.8 billion, SVB was shut down by the California Department of Financial Protection and Innovation<\/use><\/svg><\/span><\/a> on March 11. <\/p>\n\n\n\n

The Federal Deposit Insurance Corporation was also named as the receiver by the California watchdog to safeguard insured deposits. The USDC's creator, Circle, said on March 11 that $3.3 billion of its $40 billion in reserves was stranded at SBV, which caused its price to drop below its $1 peg and had an effect on other stablecoins.<\/p>\n","protected":false},"excerpt":{"rendered":"

In response to recent stablecoin price volatility, Aave has stopped trading stablecoins and set the loan-to-value (LTV) ratio to 0. The trading halt, according to Aave’s governance forum, follows a report from decentralized financial risk management firm Gauntlet Network that suggests all v2 and v3 markets should be momentarily halted. One forum user made the […]<\/p>\n","protected":false},"author":43,"featured_media":46548,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[1104,2309,1531],"class_list":["post-46546","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-aave","tag-avalanche","tag-stablecoin"],"jetpack_featured_media_url":"https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/03\/croc_1678646214446.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/46546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/users\/43"}],"replies":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/comments?post=46546"}],"version-history":[{"count":0,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/46546\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media\/46548"}],"wp:attachment":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media?parent=46546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/categories?post=46546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/tags?post=46546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}