Mango Markets Exploiter Tried to Exploit Aave Loophole: Here's How the Attempt Failed

 



A governance proposal is now live on Aave that will prevent another price manipulation on the platform.


Avraham Eisenberg, a Mango Market exploiter, attempted to reproduce his "very lucrative trading method" on the decentralised finance (DeFi) system Aave, but his attempt failed, costing him millions of dollars. According to on-chain analytics company Lookonchain, an address connected to Eisenberg deposited $40 million (approximately Rs. 325 crore) worth of USD Coin (USDC) into Aave with the goal of borrowing Curve (CRV) token. As a result, the price of CRV fell by around 26%, from $0.625 (approximately Rs. 51.14) over the previous week to $0.464 (about Rs. 37.34).

However, the strategy didn't exactly work out as anticipated because the community supported CRV, purchasing the DeFi token, which caused its value to increase by 46 percent in the previous day to as much as $0.71. (roughly Rs. 57.63).

Eisenberg may be misleading people into thinking that he is shorting CRV to force the liquidation of Michael Egorov, the creator of the DeFi network, according to a tweet from blockchain analytics company Arkham Intelligence.

Eisenberg's main goal, according to Arkham Intelligence, was the flimsy looping system of AAVE, and his borrowings might leave the DeFi network with significant bad debt. Added the blockchain analytics company: "AAVE liquidators won't be able to purchase all of the CRV Avi borrowed in order to liquidate his holdings. There isn't enough liquidity on-chain to cover more than 20% of the position. To make up for this loss, AAVE will need to sell a sizeable number of tokens from the safety module."

Eisenberg demonstrated how manipulating Aave lending policies could lead to enormous borrowing in October, dump it, and leave Aave with bad debt.

After the short strategy's failure, Aave claimed that the liquidation of its CRV pool was effective and went according to plan. While less than 0.1 percent of the slots on the protocol, or 2.6 million CRV ($1.6 million or around Rs. 13 crore), remained, it was highlighted that the post was not entirely filled.

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