$120 Million Issue Found in Aave (AAVE) New Release

Aave

The most recent version of Aave v2 for the Polygon (MATIC) blockchain contains a design flaw that security experts have discovered. It appears that their owners are unable to manage nine-digit amounts in Wrapped Bitcoin (WBTC), Wrapped Ethereum (WETH), Wrapped Matic (WMATIC), and Wrapped Tether (USDT).

$120 million worth of assets stuck in Aave v2 on Polygon, here’s how

Blue-chip DeFi protocol Aave v2’s Polygon-based version has a design issue, according to research done by BlockSec’s smart contract auditors and on-chain researchers.

Researchers claimed that the modified ReserveInterestRateStrategy, a component of the Aave v2 protocol’s logic, was to blame for the problems.

The most current iteration of this concept does not apply to Polygon (MATIC), but only to Ethereum (ETH).

On Twitter, a pseudonymous Ethereum (ETH) engineer going by the handle @mookim_eth gave a thorough examination of the causes and consequences of the problems raised by BlockSec. He claims that the loan pool for Aave v2 anticipates a changed user interface and is unable to communicate with the modified approach.

Users are thus momentarily unable to withdraw or trade $120 million worth of assets, or about 5.5 million USDT, 35,000 Wrapped Ethers (WETH), 1,500 Wrapped Bitcoins (WBTC), and 11 million Wrapped Matic (WMATIC).

Community creates emergency fix proposal

The protocol’s community has already made a statement on the issue, despite the Aave team’s failure to confirm it through its official communication channels.

This declaration attested to the fact that the assets are inaccessible because of a clash between the Ethereum- and Polygon-based Aave v2 designs:

The v2 version utilised on Aave v2 Polygon (and Avalanche) differs somewhat from Aave v2 Ethereum in terms of the interface used by the LendingPool to invoke the rate strategy of an asset due to legacy issues. The LendingPool checks the strategy for the current rate, and the operation “wrapping” it (such as deposit, borrow, etc.) reverts. This is because the new interest rate strategies applied to those assets follow the interface of Aave v2 Ethereum but not v2 Polygon.

In addition, there is no chance of losing any assets because they are completely secure in the protocol. In addition to USD Coin (USDC), Dai (DAI), and Aave (AAVE), other assets on Aave v2 are operating as designed.

According to the Aave Governance proposal, community voting on whether to adopt a patch to the Aave v2 codebase will begin on May 20, 2023, at around 4 p.m. UTC.

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