Aave Community Considers Freezing Binance\'s BUSD Stablecoin After Paxos Lawsuit

Members of the Aave community are considering a proposal to freeze Binance's BUSD stablecoin on the platform after the token's issuer, Paxos, was sued by the Securities and Exchange Commission Monday.

Members of the Aave community are considering freezing Binance’s BUSD stablecoin on the platform following news that the token’s issuer, Paxos, is being sued by the Securities and Exchange Commission.

Aave is a decentralized finance protocol that allows users to lend, borrow and stake with others through smart contracts. A governance proposal by Aave community member MarcZeller states that since Paxos will no longer be minting new BUSD tokens, the total supply will head to zero, which could “hurt peg arbitrage opportunity and asset peg.”

While there is no risk to the protocol, “BUSD has no prospect for growth,” MarcZeller adds.

The proposal has so far received a slew of positive responses, with one member going a step further to suggest that Aave should also liquidate its BUSD holdings to mitigate any further risks.

Binance's BUSD stablecoin slipped from its peg to the U.S. dollar on Monday as investors sought to protect their holdings by shifting funds into other stablecoins like tether (USDT) and USD coin (USDC).

News source：https://www.kdj.com/cryptocurrencies-news/articles/aave-community-considers-freezing-binance-busd-stablecoin-paxos-lawsuit.html

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