Aave v3 Polygon deployment: $GHST token as risk factor to cause bad debt & be exploited for price manipulation

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Riskdao.org initiated a discussion about the potential risks of the $GHST token causing bad debt and price manipulation in Aave's v3 Polygon deployment, suggesting supply and borrow caps to mitigate potential attacks. The community also discussed the impact of AavegotchiDAO vote and GBM auction on $GHST's price, which will inform the new ARC thread and understanding of GHST’s specific risk parameters.

The discussion initiated by NonstopTheo on behalf of Riskdao.org raised concerns about the potential risk of the $GHST token causing bad debt and being exploited for price manipulation in Aave's v3 Polygon deployment. The post highlighted the potential for $GHST to cause problems as a borrow asset and as collateral, and suggested implementing supply and borrow caps for $GHST to mitigate potential attacks. The post also pointed out the thin DEX liquidity for $GHST, which could potentially cause significant bad debt, and warned of the risk of price manipulation attacks.

The discussion continued with Oneski22 questioning if the ability for GHST to be minted via the Aavegotchi Bonding curve was considered in the analysis and if isolation mode could solve this attack vector. MarcZeller argued that GHST is one of the least risky assets on Aave and manipulating its asset price is likely harder than it seems due to Chainlink oracle taking multiple sources of liquidity for the price feed. NonstopTheo acknowledged the bonding curve source liquidity source and its mitigation of price manipulation concerns, but still expressed concerns about the difficulty in debt liquidations that could stem from an organic price increase in GHST price.

AL22 brought up the relevancy of the discussion in the new Risk Parameters adjustment requests in Polygon V2 and explained that the short-term price action of $GHST can be attributed to the commencement of an AavegotchiDAO vote. The community confirmed the hosting of a “GBM auction” where users can earn $GHST from outbidding each other and/or win rare NFTs by participating in the drop mechanism. This event has historically led to run-ups in $GHST price and similar behavior was observed in a few land sale auctions that occurred later. This information is expected to aid the discussion around the new ARC thread and provide a better understanding of GHST’s specific risk parameters.

Posted a year ago

Last reply a year ago

Summary updated 2 months ago

Last updated 08/12 04:39