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Aave Advances Plan to Nix Borrowing, Lending of Binance’s BUSD Stablecoin
The offboarding proposal won overwhelming support from members of the Aave DAO.
By Danny Nelson
Updated May 9, 2023, 4:10 a.m. Published Mar 9, 2023, 3:48 p.m.
Decentralized lending protocol Aave moved closer to delisting troubled stablecoin BUSD Thursday after a road map for executing the plan cleared a procedural hurdle.
Members of Aave’s decentralized autonomous organization (DAO) voted overwhelmingly in favor of a proposal to dramatically increase the cost of borrowing BUSD while decreasing the revenue accrued by its lenders, according to its author, Marc Zeller. Those actions are intended to disincentivize use of BUSD.
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“Feel free to switch to other stablecoins in Aave,” Zeller, an active member of Aave governance, said in a tweet. He did not immediately return a request for comment.
The vote comes as a growing list of market participants have backed away from Binance’s dollar-pegged stablecoin amid regulatory uncertainty. Zeller wrote in his proposal that the circulating supply of BUSD will trend “towards zero over time,” making its offboarding necessary.
Read more: BUSD Drama Sets Stage for Stablecoin Market Reshuffling
Aave froze its middling BUSD markets in anticipation of the upcoming on-chain vote. The final stage in the governance process would trigger changes to the smart contracts that control borrowing and lending.
At press time, Aave held nearly $11 million in BUSD liquidity from lenders and had $7.6 million in the stablecoin loaned out.
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