The crypto market continues to take a beating in the bearish market. Due to the current market turmoil, DeFi’s Total Value Locked (TVL) has fallen by 55% since late April. At the time of writing, the total TVL has actually fallen significantly this month. A 10% drop (standing at $75 billion) in its TVL in the past 24 hours.
But it seems that one platform has suffered the most.
Of the top five DeFi protocols with the largest TVL, the Aave protocol appeared to have suffered the most decline in the past 24 hours. In a month, the protocol witnessed a 41% correction and is currently at a TVL of $5.64 billion and ranked second in the ranking of DeFi protocols.
As for the price, AAVE witnessed another correction as it dropped below $58, marking a huge drop. Around June 6, the AAVE token broke past its crucial resistance level of $104 and registered a high of $111 during intraday trading. However, this was immediately followed by a price adjustment that caused the token to lose 21% of its accumulated gains.
Interestingly, AAVE holders were aware of a decline when they decided to book their profits as AAVE completed a 52% rally on June 11 and sold $17 million worth of AAVE. Since then, it has been a descent for the token.
This can be clearly seen in the graph above. Volume trades remained low with no excitement around the network, hence investor sentiment.
What have I done?
The protocol itself didn’t do much to register a recovery. Additionally, MakerDAO has voted to no longer allow the loan platform Aave to generate collateral-free DAI for its loan pool. The risks of Celsius’s liquidity crisis are spreading across the crypto ecosystem to make matters worse.
The Maker Governance has voted to temporarily de @AaveAave DAI Direct Deposit Module (D3M).
This change will be available for implementation on June 17, 2022 21:03 UTC.
— Maker (@MakerDAO) June 15, 2022
Disabling the module would mean that Aave can no longer generate DAI at will and can only pay off existing debt. The change will be available for implementation on June 17. In addition, Aave rejected the proposal for additional risks due to its multi-chain implementations.
This post MakerDAO’s actions against Aave had these effects on the DeFi platform
was published first on https://ambcrypto.com/makerdaos-actions-against-aave-had-these-repercussions-on-the-defi-platform/