Decentralized finance (DeFi) protocol Aave, known for its lending and borrowing features on various blockchains, including Ethereum, Polygon, and Avalanche, faced a setback last week. Users of Aave version 2 (V2) on the Polygon blockchain encountered difficulties accessing their funds due to a faulty bug in a recently deployed strategy.
The bug affected popular tokens such as tether (USDT), bitcoin (BTC), ether (ETH), and polygon (MATIC). While this compatibility issue disrupted user access temporarily, the Aave community swiftly addressed the problem and implemented a fix.
Bug in the ReserveInterestRateStrategy
Security firm BlockSec revealed that an upgrade to the “ReserveInterestRateStrategy” led to the access problem experienced by Aave V2 users on the Polygon blockchain. The ReserveInterestRateStrategy contract is a crucial component of Aave, responsible for calculating and applying interest rates to borrowed loans. However, due to differences in the interface used by the LendingPool, the version of Aave V2 on Polygon and Avalanche differs slightly from Aave V2 on Ethereum.
.@AaveAave the latest upgrade of ReserveInterestRateStrategy in Aave V2 (Polygon) has caused a temporary halt of the protocol, impacting assets worth ~$110M!
The root cause is the new ReserveInterestRateStrategy is only compatible with Ethereum, not compatible with Polygon. https://t.co/kg5696QNPo pic.twitter.com/Ze3zSBS8Ck— BlockSec (@BlockSecTeam) May 19, 2023
Explanation by BDGLabs
To shed light on the issue, a member of the Aave community, BDGLabs, explained that the disparity between the Ethereum and Polygon versions caused the compatibility bug. While the new interest rate strategies implemented on Aave V2 Ethereum adhered to the correct interface, the same strategies did not align with the interface of Aave V2 Polygon. Consequently, when the LendingPool queried the strategy for the current interest rate, the call would revert, affecting actions like deposits, borrowing, and other related functions.
Resolution and User Participation
Aave promptly responded to the issue by proposing a governance vote to rectify the bug and restore user access to their funds. The community members and users voted in favor of the proposed fix, indicating the collaborative nature of the Aave ecosystem. The implementation of the solution allows users to top up their funds on the Polygon network once again.
Conclusion
The recent incident affecting Aave V2 users on the Polygon blockchain serves as a reminder of the complexities that arise within decentralized finance protocols. The compatibility bug resulting from an upgrade to the ReserveInterestRateStrategy briefly disrupted user access to funds, impacting popular tokens like tether, bitcoin, ether, and polygon.
However, the Aave community responded swiftly, identifying the issue and proposing a fix that received support from the community. As the DeFi landscape continues to evolve, incidents like these emphasize the importance of robust testing and community involvement to ensure the smooth operation of decentralized financial platforms.
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