Decentralized Finance (DeFi) lending protocol Aave V2 has been hit by a glitch on the Polygon network, leading to approximately $110 million in assets becoming inaccessible to users. The issue was first reported by BlockSec, a blockchain security firm, on May 19. The trouble arose from an incompatible ReserveInterestRateStrategy contract, initially deployed to improve interest rate efficiency and platform utilization.
The incompatibility of the upgrade with the network has led to user assets becoming non-interactable on the Aave platform. Consequently, users can neither borrow, withdraw, repay, nor supply more assets, as all calls revert.
Despite the hiccup, developers have confirmed that only Aave V2 on Polygon is impacted. Other versions on Ethereum and Avalanche, as well as the V3 protocol, are functioning correctly. Importantly, developers have assured users that their funds remain secure, including the assets currently stuck due to the bug.
Resolving the issue requires governance intervention. A proposal has been put forward to rectify the situation, with the Aave DAO slated to begin voting on the matter soon.
According to the proposal, if approved, the fix would take roughly a week to implement. This includes a delay of one day to initiate voting, three days of voting, a day of Ethereum timelock, and an additional two-day timelock on Polygon.
This episode underscores the intricacies of DeFi and the unique challenges posed by various Ethereum Virtual Machine-compatible (EVM) chains. It also emphasizes the critical role of governance in managing and addressing potential technical issues in decentralized protocols.
