Bittime - The Aave DAO community, the manager of one of the largest decentralized finance (DeFi) platforms, is clashing with MakerDAO, a leader in the stablecoin space. It is feared that this dispute could divide the DeFi world.
In the last two months, Aave DAO took several controversial steps that were deemed to prioritize their internal interests. For example, Aave cut off cooperation with Gauntlet, a risk management company, because it was suspected of collaborating with competitors.
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They also created a special team to interact with other DAOs on Arbitrum, and recently, they excluded Morpho Aave users from the free token distribution program (airdrop).
Morpho Aave is a platform built on top of Aave, but considers Aave DAO a competitor due to its user attraction and profitability.
Also read: What is Aave? DeFi Platform Pioneer
Most recently, Aave DAO proposed reducing the collateral value (loan-to-value ratio) for DAI, MakerDAO's stablecoin, to 0%. This means that DAI can no longer be used as collateral to borrow crypto assets on Aave.
Many parties are worried that Aave's move will cause DeFi to divide into isolated "gardens", where platforms close themselves off and no longer work together.
Aave's decision was triggered by a controversial proposal from MakerDAO itself. MakerDAO plans to allocate up to $1 billion to purchase USDe and sUSDe, two new stablecoins issued by Ethena. This decision was considered risky by Aave.
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Aave founder Stani Kulechov even suggested that Aave should no longer support DAI at all. As a result, Aave DAO also proposed that Spark, a lending platform connected to MakerDAO, be labeled as "not aligned" with Aave. This means that Spark users will no longer be able to receive airdrops from Aave DAO.
Players in other DeFi worlds are worried about the dispute. They worry that the loss of cooperation between large DeFi platforms could be detrimental to all parties.
Also read: What is DeFi?
"DeFi should support each other and ensure that no one acts carelessly. The losses if DeFi breaks apart would be enormous," said Martin Köppelmann, co-founder of Gnosis, another DeFi platform.
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Blockworks analyst Matt Fiebach argues that the splitting of DeFi into isolated “farms” would be disastrous.
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Also read:
Staking Aave (AAVE): A Complete Guide for Beginners and Experienced Investors
AAVE Predictions According to Crypto Academy
What is Maker Protocol (MakerDAO)?
What is Maker Protocol (MakerDAO)?
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