Aave Proposal Rejects Binance’s BUSD Stablecoin: DAO Votes Overwhelmingly Yes

•Aave, a decentralized lending protocol, is moving closer to delisting Binance’s BUSD stablecoin.
•Members of Aave’s DAO voted overwhelmingly in favor of a proposal to increase the cost of borrowing BUSD while decreasing revenue for its lenders.
•A growing list of market participants have backed away from BUSD due to regulatory uncertainty.

Aave Advances Plan to Nix Borrowing and Lending of BUSD Stablecoin

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.

Growing Uncertainty Around Regulatory Issues

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. At press time, Aave held nearly $11 million in BUSD liquidity from lenders and had $7.6 million in the stablecoin loaned out.

Freezing Middling Markets

Aave froze its middling markets in anticipation of an upcoming on-chain vote which would trigger changes to the smart contracts that control borrowing and lending if it passed with sufficient support from members. The final stage in the governance process was met with overwhelming approval by members who showed their support for delisting this asset class from their platform.

Delisting Necessary To Protect Users

Delisting this asset class is necessary as it will protect users participating on Aave’s platform from any possible legal repercussions associated with trading or holding tokens that lack clarity around their regulatory status within certain jurisdictions they may operate within or interact with users from outside those jurisdictions . This decision also allows them to focus on other asset classes and token pairs which hold greater promise for growth potential and user engagement going forward.

Switch To Other Stablecoins Encouraged

The author encouraged users “Feel free to switch to other stablecoins in Aave” further hinting at alternatives available on their platform such as USDC and USDT both issued by Coinbase and Tether respectively which are more established assets offering greater levels security and stability compared against heavily regulated coins like Bitcoin or Ethereum .