Aave V2 Users Temporarily Unable to Access $120M on Polygon After Governance Bug

All funds remain safe and a governance proposal is underway to update the faulty strategy, developers said.

AccessTimeIconMay 23, 2023 at 6:56 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Some Aave version 2 (V2) users are temporarily unable to access their funds stuck on the decentralized exchange's deployment on the Polygon blockchain after a strategy containing a faulty bug went live last week.

Decentralized finance (DeFi) protocol Aave allows users to lend and borrow tokens on several blockchains, such as Ethereum, Polygon and Avalanche. The extent of this sometimes causes compatibility bugs to arise, temporarily rendering parts of the platform inaccessible to users and leave funds stuck.

An upgrade last week to the “ReserveInterestRateStrategy” caused the issue, security firm BlockSec tweeted. Affected tokens include tether (USDT), bitcoin (BTC), ether (ETH) and polygon (MATIC).

The ReserveInterestRateStrategy contract is a core contract in Aave that helps calculate and apply interest rates to borrowed loans.

“The root of the problem is that, for legacy reasons, the v2 version used on Aave v2 Polygon (and Avalanche) is slightly different from Aave v2 Ethereum, in regards to the interface used by the LendingPool to call the rate strategy of an asset,” Aave community member BDGLabs explained.

“The new interest rate strategies applied to those assets respect the interface of Aave v2 Ethereum, but not v2 Polygon, so when the LendingPool queries the strategy for the current rate, this call reverts, and so does the action “wrapping” it (e.g. deposit, borrow, etc),” the firm added.

A fix is already in place, voting on by community members and users can top up funds on the network, an Aave governance proposal shows.

Other versions of Aave on Polygon continue to work smoothly as of Tuesday. AAVE tokens were up 2.7% in the past 24 hours, in line with a broader market jump.

Edited by Omkar Godbole.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.