The decentralized loan protocol treated millions of millions of liquidations on Monday without accumulating new debts of bad, presenting its resilience during market volatility, according to data from the chaos laboratories.
The cryptography market was wholehearted early on Monday, the Bitcoin Prize (BTC) falling at nearly $ 91,000, against $ 100,000 as concerns of a renewed trade war between the United States and its best partners Canada , Mexico and China have sent shock waves via the financial markets. The slide was reversed later in the day after President Donald Trump interrupted prices on Mexico for 30 days.
The solid bidirectional price action has led to margin shortages, resulting in massive liquidations, the forced closure of positions on centralized and decentralized commercial avenues. Aave has alone treated $ 210 million in liquidations, its highest day count since the August 5 crash, according to data. More importantly, the protocol has avoided taking new debts of bad.
The protocol is accompanied by bad debts when the borrowers do not reimburse their loans and the guarantee provided is insufficient to cover the current amounts. The risk is higher during the volatile market conditions, such as Monday, when net prices decrease and low request obstruct the effective liquidation of guarantees.
“The liquidations were carried out effectively in the protocol, most of which were carried out on the main body of Ethereum. Robust risk management mechanisms within the Aave have assured that the guaranteed positions have been settled as expected, Minimizing protocol losses, “said Chaos Labs on X.
Aave has essentially accessed the market stress test, demonstrating the effectiveness of its risk control measures and liquidation mechanisms. Its existing mediocre debt even decreased by 2.7% due to the drop in the value of debt assets.
The observer of Defi Pseudonym Leo praised Aave’s performances as proof of the solid decentralized finance foundation, which includes “a rigorous collateral selection and management by governance, an effective protocol design for liquidations, pools of Thick liquidity in the ecosystem “.
Imminent upgrades such as Aave V3.3, V4 and Umbrella updates indicate a promising future for the DEFI industry, said Leo.
Version 3.3, announced in December, presents a function to record and erase the non -pollared liquidation questionable receivables, allowing an umbrella, an automated debt management system, to manage the risks and liabilities of lower protocol. The version also helps to control the accumulation of so -called dust debt, which are small amounts of debt difficult to erase or liquidate because of their negligible value.
