On May 28, Aave, a leading lending protocol on Ethereum, introduced a new Aave Request for Comment (ARFC), which is a proposal that contains a new standardized Technical Asset Listing Framework for the Aave ecosystem.
According to the official announcement, this is a new framework for asset listing on protocols like Aave V3, V4, and Aave Horizon.
What is Inside Aave’s New Asset Listing Framework
The main purpose of this new framework for asset listing is to help the protocol enhance its “listing and monitoring process.” This will also help the Aave protocol to keep an eye on the quality of assets. By doing this, the lending protocol wants to ensure that listed assets on its platform follow its safety standards.
While the Aave ecosystem is continuously expanding its boundary by expanding its presence on new blockchain networks, the protocol wants to ensure the safety of users by verifying new as well as existing assets on the protocol amid the growing cybersecurity threat incidents in the last few months.
This is one of the major steps that Aave is working on after the bizarre case of the Kelp DAO hack, which created a bad debt in the DeFi ecosystem after the exploitation of its bridge linked to LayerZero. In April, Kelp DAO suffered a massive cyber attack after attackers found vulnerabilities present on the bridge powered by LayerZero. This small vulnerability on the bridge has allowed hackers to steal more than $292 million in just a few hours. After stealing rsETH tokens, hackers have used these tokens as collateral on Aave V3. In reality, these tokens had no backing, and this is why they created a bad debt on the protocol.
However, as of now, the situation is in control after a month of work, as Aave and Kelp DAO have completely restored a proper backing for rsETH tokens after launching initiatives like DeFi United. This initiative has been joined by other DeFi entities like Mantle, Lido Finance, EtherFi, and others.
In the new proposed listing standards, Aave is trying to fix these problems by implementing better standards while checking the asset’s profile.
“The framework is intended to be deployment-aware. Where an asset exists across multiple chains, the asset is expected to satisfy the applicable requirements on each relevant chain, including per-chain contract implementations, oracle paths, bridge topology, access-control structure, and dependency configuration,” stated in the official announcement.
Aave’s New Listing Framework Takes Cross-Chain Bridge Security Seriously
In the new proposed framework, the lending protocol is covering one of the biggest soft targets for hackers, which is the cross-chain bridge.
While blockchain interoperability is growing with every passing day, these cross-chain bridges are responsible for a majority of cyber attacks in the crypto sector. These bridges are transacting a big sum of money every day between different blockchains.
For example, around 40% of the total hacks that happened in the last few years were due to cross-chain bridges, according to DeFiLIama.
There have been major hacks in the past due to cross-chain bridges, including the Ronin bridge, Wormhole bridge, Nomad bridge, Poly Network, HTX-Ethereum, and others.
The official page stated that, “The framework defines the technical information and requirements expected from asset issuers and review contributors. Formal technical assessment reports may include qualitative ratings or findings summaries for use by risk providers and governance contributors, but this ARFC does not prescribe rating reference values or define exhaustive blocker conditions.”